ExpertMedium2 marksMultiple Choice
ACCA · Question 15 · Income Tax Liabilities
Section A: Objective Test
For the tax year 2023/24, Chloe has a threshold income of £210,000 and an adjusted income of £280,000.
What is Chloe's available pension annual allowance for 2023/24, assuming she has no unused allowances brought forward?
Section A: Objective Test
For the tax year 2023/24, Chloe has a threshold income of £210,000 and an adjusted income of £280,000.
What is Chloe's available pension annual allowance for 2023/24, assuming she has no unused allowances brought forward?
Answer options:
A.
£60,000
B.
£50,000
C.
£40,000
D.
£10,000
How to approach this question
Check if threshold income > £200,000 and adjusted income > £260,000. If both are met, reduce the £60,000 standard allowance by £1 for every £2 adjusted income exceeds £260,000.
Full Answer
B.£50,000✓ Correct
For 2023/24, the standard pension annual allowance is £60,000. Tapering applies if Threshold Income > £200,000 AND Adjusted Income > £260,000. Chloe meets both conditions.
Excess Adjusted Income = £280,000 - £260,000 = £20,000.
The allowance is reduced by £1 for every £2 of excess: £20,000 / 2 = £10,000 reduction.
Tapered Annual Allowance = £60,000 - £10,000 = £50,000.
Common mistakes
Using the pre-2023/24 limits (standard allowance £40,000, adjusted income threshold £240,000).
Practice the full ACCA TX — Taxation Practice Exam 1
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