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ACCA Strategic Professional · Advanced Taxation (UK) · Income tax: the comprehensive computation of taxable income and the income tax liability

Raj has no earnings in 2025/26 and no other income. He wishes to make a personal contribution to a registered pension scheme. According to the ATX-UK tax rates and allowances, what is the maximum contribution that can qualify for tax relief without any earnings?

The maximum contribution that qualifies for tax relief without any earnings is £3,600 gross. The person would actually pay £2,880 net, with basic rate relief added at source. The £10,000 and £60,000 figures relate to the annual allowance, not to the no-earnings limit.

  1. A£3,600Correct
  2. B£10,000
  3. C£2,880
  4. D£60,000

Explanation

The tax rates and allowances state that the maximum contribution which can qualify for tax relief without any earnings is £3,600. This is the gross figure, so Raj would pay £2,880 net and basic rate relief is added at source. £2,880 is the net payment, not the maximum qualifying contribution. £10,000 is the minimum tapered annual allowance and £60,000 is the standard annual allowance.

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