Tx notes fa22 Final

June 2023 to March 2024 exams
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5. Lifetime Allowance 
When the taxpayer takes their pension, a tax free lump sum of 25% of the value of the pension fund 
may be taken and whereas previously the remainder would have to be used to buy a pension 
annuity, the taxpayer may now withdraw the balance of the pension fund as taxable income 
whenever they wish. 
In addition to the AA limiting the tax relief available on yearly contributions a Lifetime Allowance of 
£1,073,100 applies to the value of the pension fund built up at the date the taxpayer takes their 
pension. If the fund value exceeds this limit an Income Tax charge will arise on the excess dependent 
upon how the excess is used. 
These calculations however are not within the syllabus!
Students should then attempt Practice Question 17 

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June 2023 to March 2024 exams
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Chapter 11
NATIONAL INSURANCE 
CONTRIBUTIONS (NIC) 
1.
 
Employed earners 
1.1. Class 1 contributions 
(a)
Class 1 NIC is paid by employees and employers as follows:
(b)
Employees
The contributions begin when the employee is aged 16 or over. For 2022/23, the rate of 
employee Class 1 NIC is at 13.75%. It is paid where 
cash
earnings exceed a threshold of 
£12,570 per annum, but only up to an upper limit of £50,270 per annum. However for earnings 
above £50,270 per annum there is a rate of 3.25% payable with no limit. The contributions 
cease when the employee reaches pensionable age.
(c)
Employers
The rate of employer Class 1 NIC is 15.05%. It is paid on 
cash
earnings that exceed a 
threshold of £9,100 per annum. These are payable from the employees 16th birthday - but 
there is no upper age limit.