RPSM13102360 - Technical Pages: International: Application of charges to non-UK schemes: Annual allowance: Example pension input amount – defined benefits

Example of a pension input amount for a defined benefits arrangement

Jenny is a currently-relieved member of a currently-relieved non-UK pension scheme whose defined benefits rights increase by £100,000 in the 2006/07 tax year (calculated using the 10:1 factor). Her total earnings from the employment to which those benefits rights related in that pension input period was £300,000. But only £225,000 of those earnings were UK taxable earnings under section 10(2) ITEPA 2003.

As her UK taxable earnings represent 75 % of her total earnings that same proportion is applied to the increased benefits rights. This means that her pension input amount for the tax year in respect of this scheme is £75,000.

However, if in 2006/07 she also made £100,000 contributions on which UK tax relief was obtained, her pension input amount would be £100,000 instead.