This was a real case that was referred to me for comment.
It highlights the very real issues and practical workings of an annual allowance calculation using a mini-case study.
And it’s exactly the kind of question you’ll get in the AF3 exam.
And it’ll be worth 20 marks.
And, if you want to pass this tricky exam, these are marks you need to score heavily.

Annual Allowance (AA) is module 1 of our 14 week structured study plan which starts today.
Let’s get started.

Lets call him Mr Smith.

We are going to transfer the pension he has at the moment and this (thankfully) is the only scheme that he has paid into.

His Pension Input Period (PIP) for this scheme runs 2 May – 1 May.
Mr Smith is a Director where all contributions are employer contributions:

2008/09 £24,930.90

2009/10 £27,423.99

2010/11 £30,166.41

2011/12 £33,183.12

2012/13 £36,500.48

2013/14 £40,151.70

2014/15 £29,102.22

These are the contributions paid to the 1st December.
He will make further contributions totalling £13,333.33 from 1st Jan to 1st April 2015 into the new pension scheme, with a PIP defaulting to the tax year.

What is the maximum personal contribution he can he pay in for the tax year 2014/15 to top-up his pension (assuming he has the earnings)?

Have a think.

Try some slow thinking and have a great week.