ACCA Strategic Professional · Advanced Taxation (UK) · Income tax: the comprehensive computation of taxable income and the income tax liability
In 2025/26 Imogen has relevant earnings of £140,000 and no other income. Her gross personal pension contribution in 2025/26 is £50,000, with no employer contributions. She has no unused annual allowance brought forward and is not affected by tapering. Which statement about the annual allowance charge and relief is correct?
Full relief is available on the £50,000 because it is below both her £140,000 earnings and the £60,000 annual allowance. Her income is below the £260,000 income limit, so no tapering applies and the £10,000 minimum allowance is irrelevant. No annual allowance charge arises.
- ARelief is available on the full £50,000 as it is below the £60,000 annual allowance and below her earnings, so no annual allowance charge arisesCorrect
- BRelief is restricted to £37,700 as that is the basic rate band
- CAn annual allowance charge arises on £50,000 because her income exceeds £125,140
- DRelief is limited to £10,000, the minimum allowance
Explanation
The annual allowance is £60,000 for 2025/26, and the threshold income limit and income limit only matter for tapering. Her adjusted income is £140,000 plus nothing else, below the £260,000 income limit, so no taper applies. Contributions of £50,000 are below both the allowance and her earnings, so full relief is available and no charge arises. The £10,000 minimum applies only for fully tapered individuals, which she is not.
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