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  • FIRST POST
    • Sir2You
    • By Sir2You 2nd Oct 17, 9:41 PM
    • 2Posts
    • 0Thanks
    Sir2You
    Adjusted Income calculation with Defined Benefit Pension Scheme
    • #1
    • 2nd Oct 17, 9:41 PM
    Adjusted Income calculation with Defined Benefit Pension Scheme 2nd Oct 17 at 9:41 PM
    Hi All

    I would be grateful if someone could explain how Adjusted Income, Threshold Income and ultimately Tapered Allowance are calculated when one is lucky enough to still be part of a Defined Benefit Pension Scheme. I have read extensively on the matter on various websites (HMRC, financial institutions etc...) without unfortunately getting absolute clarity.

    Here are the numbers:
    A = Pay from employment: £122,957
    B = Benefits + expenses received: £2,116
    C = Allowable Expenses: £1,430
    D = Interests etc...: £685

    E = Pension Input Amount: £53,937
    F = Unused Allowances: £31,734

    G = Employer's contribution: £13,707
    H = Employee's contribution: £10,458

    I'm pretty comfortable with the calculation of the Threshold Income which I think should A + B and therefore above the £110k (I'm assuming C and D are relevant for my Tax Return but not the calculation of the Threshold Income).

    Past this point however, I'm unsure as to how to calculate the Adjusted Income and whether it should be:
    1) A + B + E = £179,010
    2) A + B + G + H = £149,238
    3) Another combination...

    Clearly this is of substantial importance as 2) would mean that the £40k allowance wouldn't be tapered and therefore a useful carry-over of £17.8k would still be available into this year. Should 1) be the right calculation, then the allowance would be tapered down to £25.9k and lead to a much lower carry-over of £3.3k. Although this may not matter much for the 2016-2017 tax return, it would make a massive difference to the one for 2017-2018.

    If someone has been through this already, I'd love to get your perspective.

    Thank you
Page 1
    • Brynsam
    • By Brynsam 3rd Oct 17, 2:09 AM
    • 205 Posts
    • 180 Thanks
    Brynsam
    • #2
    • 3rd Oct 17, 2:09 AM
    • #2
    • 3rd Oct 17, 2:09 AM
    Good clear article at https://www.moneymarketing.co.uk/tapering-of-annual-allowance-adjusted-and-threshold-incomes/
    • Sir2You
    • By Sir2You 4th Oct 17, 8:56 PM
    • 2 Posts
    • 0 Thanks
    Sir2You
    • #3
    • 4th Oct 17, 8:56 PM
    • #3
    • 4th Oct 17, 8:56 PM
    Thanks Brynsam.

    I had come across this article, however it didn't seem to into consideration Defined Benefits Schemes so I wasn't sure whether it would apply.

    I'll carry on investigating.

    Thanks
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