I see the table all over the place that tells me the maximum allowable percentage of my salary that I can contribute in a tax year. For me the important entries right now are Age 36-45: 20%. Age 46-50: 25% (subject to a cap on maximum allowable earnings).
What I haven't seen is a real definition of how age is defined. As far as I can see, there are 3 ways that these rules could be interpreted. Could someone please tell me which is correct:
1) It is done on the basis of what age you are when you start the tax year, so if I turn 46 next June then, because I am still 45 when we enter the 2004/2005 tax year, my contributions can only be 20% for the 2004/2005 tax year.2) The opposite of the above, i.e. the allowance increases for the tax year in which I turn 46, so I would be entitled to pay 25% for 2004/2005 tax year.
3) It is done on a monthly basis (assuming I am paid monthly) so the changeover can happen mid-year. If this is the case then there is still the same ambiguity as for (1)/(2) above with respect to the particular month when I turn 46. If I turn 46 in mid June then can I contribute 20% or 25% of my June pay?I hope someone can quickly clarify the above for me. Thanks,
Julian