Carry Forward

I will try to articulates this question correctly.

In tax year 2016/17, I pay £43,000 into my pension and look back at the three preceding tax years and there is a huge amount available for carry forward so the £3,000 over the £40,000 is well covered.

Now let's say that in 2017/18, I want to contribute £60,000. I look back at the three preceding tax years (rolled forward by one year) and have more than sufficient carry forward.

Does the fact that I exercised the carry forward option in 2016/17 preclude me from using carry forward in 2017/18?
I have osteoarthritis in my hands so I speak my messages into a microphone using Dragon. Some people make "typos" but I often make "speakos".
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  • Linton
    Linton Posts: 17,064
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    It may or may not depending on how the spare allocations are spread. You must use all of your £40K in the current year before you take advantage of previous years. So you cant empty the 3 previous years to maximise the current year's spare allocation. But as long as you have allocated the allowance correctly you can continue to take advantage of the three year carry forward.
  • Malthusian
    Malthusian Posts: 10,898
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    No (based on the facts presented). The £43,000 contribution would have used £40,000 from 2016/17 and £3,000 from 2013/14 (assuming you had £3,000 available to use). Any leftover allowance from 2013/14 has now been lost. If you still have unused allowance from 2014/15 and 2015/16 you can carry it forward.

    Remember that you need to have had a pension plan open in the relevant year to have allowance to carry forward - any kind of defined contribution, defined benefit or drawdown pension will do.
  • Sterlingtimes
    Sterlingtimes Posts: 2,374
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    edited 19 June 2017 at 10:32AM
    Malthusian wrote: »
    No (based on the facts presented). The £43,000 contribution would have used £40,000 from 2016/17 and £3,000 from 2013/14 (assuming you had £3,000 available to use). Any leftover allowance from 2013/14 has now been lost. If you still have unused allowance from 2014/15 and 2015/16 you can carry it forward.

    Remember that you need to have had a pension plan open in the relevant year to have allowance to carry forward - any kind of defined contribution, defined benefit or drawdown pension will do.

    Thank you, Malthusian. This is really helpful.

    So in 2013/14 my allowance was £50,000, but I contributed only £30,994 so the £3,000 for my 2016/17 excess easily came from that year 2013/14.

    So 2014/15 onwards presumably remains untouched.

    My calculation now appears to be as follows:

    170619_carry_forward.jpg

    Do I need to square the calculation with the Revenue & Customs?
    I have osteoarthritis in my hands so I speak my messages into a microphone using Dragon. Some people make "typos" but I often make "speakos".
  • OldMusicGuy
    OldMusicGuy Posts: 1,752
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    Do I need to square the calculation with the Revenue & Customs?
    I hope not, because I used the same calculator to support my own carry forward allowance calcs for the last 7 years and didn't tell HMRC. I just kept a copy of the calculations I used to support my pension contributions that were reported in my self-assessment form in case they were ever queried. So far I haven't had them query what I claimed.
  • jamesd
    jamesd Posts: 26,103
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    Tell HMRC nothing unless you pay in more than you're allowed. If you do that, ask HMRC for a tax return so you can pay the annual allowance charge. Enter the amount above the amount you were allowed and HMRC will charge you. It isn't punitive just the extra relief you got that you weren't entitled to.
  • Laycity
    Laycity Posts: 1,892
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    edited 19 June 2017 at 1:48PM
    How much do you earn? You can only contribute a maximum of 100% of your gross income this year.
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  • jamesd
    jamesd Posts: 26,103
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    If you were to pay in gross more than gross pay for the year just tell the pension firm and they will pay you a refund of excess contributions lump sum. Tell them as soon as you can but the time limit is many years. No penalties, they just return the excess you paid to you and the excess tax relief to HMRC.
  • Sterlingtimes
    Sterlingtimes Posts: 2,374
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    Laycity wrote: »
    How much do you earn? You can only contribute a maximum of 100% of your gross income this year.

    Yes, I am "retiring" this month. So far this year I have made maximum monthly pension contributions by salary sacrifice relative to my salary save for the monthly Living Wage. Now I may set up a limited company to do some contracting, and I would like to optimise pension contributions so that I can save on tax, employer's NI and employee's NI.

    This thread has given me great guidance. Thank you, Laycity.
    I have osteoarthritis in my hands so I speak my messages into a microphone using Dragon. Some people make "typos" but I often make "speakos".
  • Sterlingtimes
    Sterlingtimes Posts: 2,374
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    jamesd wrote: »
    If you were to pay in gross more than gross pay for the year just tell the pension firm and they will pay you a refund of excess contributions lump sum. Tell them as soon as you can but the time limit is many years. No penalties, they just return the excess you paid to you and the excess tax relief to HMRC.

    Thank you, jamesd. Great advice from you as usual! I will bear this in mind.
    I have osteoarthritis in my hands so I speak my messages into a microphone using Dragon. Some people make "typos" but I often make "speakos".
  • jamesd wrote: »
    If you were to pay in gross more than gross pay for the year just tell the pension firm and they will pay you a refund of excess contributions lump sum. Tell them as soon as you can but the time limit is many years. No penalties, they just return the excess you paid to you and the excess tax relief to HMRC.

    That is correct (happened to me). I was working through unused carry-forward, so I also had to submit corrected tax returns for the last couple of tax years and pay a few £k extra tax, so it can be more complicated than just the pension co fixing it in the background if it goes beyond 1 year.

    It is quite routine though - no one gets very excited about it. (HMRC didn't even pick it up on my returns - I found it myself)
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