James has a Personal Fund Threshold certificate for €5.5 million. In 2020 he withdrew €3.5 million from a Small Self-Administered Pension Scheme. What is the chargeable excess?

James has a Personal Fund Threshold certificate for €5.5 million. In 2020 he withdrew €3.5 million from a Small Self-Administered Pension Scheme. What is the chargeable excess?

• A. Nil
• B. €687,107
• C. €1,000,000
• D. €1,500,000

Answer: (A)

The chargeable excess is based on how much of the SSAPS fund value exceeds the Personal Fund Threshold shown on the PFT certificate. If the fund’s value is within or at that threshold, no excess tax applies. Here, the certificate allows €5.5 million. With a €3.5 million withdrawal, the fund value remains at or below the threshold, so there’s no portion above €5.5 million to tax. Therefore, the chargeable excess is nil. If the fund value had remained above €5.5 million, the excess would be subject to the charge, but that isn’t the case given the information provided.

The chargeable excess is based on how much of the SSAPS fund value exceeds the Personal Fund Threshold shown on the PFT certificate. If the fund’s value is within or at that threshold, no excess tax applies. Here, the certificate allows €5.5 million. With a €3.5 million withdrawal, the fund value remains at or below the threshold, so there’s no portion above €5.5 million to tax. Therefore, the chargeable excess is nil. If the fund value had remained above €5.5 million, the excess would be subject to the charge, but that isn’t the case given the information provided.