Annual allowance
You'll learn how the annual allowance works and when a tax charge applies if pension contributions exceed the permitted limit. This video covers the two key definitions you need to master—threshold income and adjusted income—and shows you how to calculate whether the annual allowance is reduced.
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In this lesson
- 0:00 Understanding the annual allowance charge
- 0:40 Threshold income and adjusted income definitions
- 1:13 When the annual allowance gets reduced
- 1:53 Carrying forward unused annual allowance
- 2:57 Calculating the annual allowance charge
About this lesson
You'll also discover how to use carried-forward allowance from previous years and work out the annual allowance charge itself. Essential for TX and ATX, this concept regularly appears in exam questions and affects how your clients plan their pension contributions.
Duration: 4m
Transcript
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