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  • FIRST POST
    • Sterlingtimes
    • By Sterlingtimes 19th Jun 17, 9:11 AM
    • 1,345Posts
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    Sterlingtimes
    Carry Forward
    • #1
    • 19th Jun 17, 9:11 AM
    Carry Forward 19th Jun 17 at 9:11 AM
    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?
    Solar installed 21 November 2014 > Centre of England > 3,780 Wp > 14 *270 Watt Trina panels > 14 * Enphase micro-inverters > managed by Enlighten Envoy Hub > 19° west of south > 35° pitch > tree shading to east > iBoost > Wattson Anywhere monitoring > Ovo Smart Gateway > Schneider Electric (Drayton) MiGenie smart thermostat.
Page 1
    • Linton
    • By Linton 19th Jun 17, 9:31 AM
    • 8,329 Posts
    • 8,224 Thanks
    Linton
    • #2
    • 19th Jun 17, 9:31 AM
    • #2
    • 19th Jun 17, 9:31 AM
    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
    • By Malthusian 19th Jun 17, 9:48 AM
    • 3,066 Posts
    • 4,433 Thanks
    Malthusian
    • #3
    • 19th Jun 17, 9:48 AM
    • #3
    • 19th Jun 17, 9:48 AM
    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
    • By Sterlingtimes 19th Jun 17, 11:24 AM
    • 1,345 Posts
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    Sterlingtimes
    • #4
    • 19th Jun 17, 11:24 AM
    • #4
    • 19th Jun 17, 11:24 AM
    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.
    Originally posted by Malthusian
    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:



    Do I need to square the calculation with the Revenue & Customs?
    Last edited by Sterlingtimes; 19-06-2017 at 11:32 AM.
    Solar installed 21 November 2014 > Centre of England > 3,780 Wp > 14 *270 Watt Trina panels > 14 * Enphase micro-inverters > managed by Enlighten Envoy Hub > 19° west of south > 35° pitch > tree shading to east > iBoost > Wattson Anywhere monitoring > Ovo Smart Gateway > Schneider Electric (Drayton) MiGenie smart thermostat.
    • OldMusicGuy
    • By OldMusicGuy 19th Jun 17, 11:32 AM
    • 133 Posts
    • 214 Thanks
    OldMusicGuy
    • #5
    • 19th Jun 17, 11:32 AM
    • #5
    • 19th Jun 17, 11:32 AM
    Do I need to square the calculation with the Revenue & Customs?
    Originally posted by Sterlingtimes
    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
    • #6
    • 19th Jun 17, 1:21 PM
    • #6
    • 19th Jun 17, 1:21 PM
    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
    • By Laycity 19th Jun 17, 1:59 PM
    • 1,450 Posts
    • 2,180 Thanks
    Laycity
    • #7
    • 19th Jun 17, 1:59 PM
    • #7
    • 19th Jun 17, 1:59 PM
    How much do you earn? You can only contribute a maximum of 100% of your gross income this year.
    Last edited by Laycity; 19-06-2017 at 2:48 PM.
  • jamesd
    • #8
    • 19th Jun 17, 2:26 PM
    • #8
    • 19th Jun 17, 2:26 PM
    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
    • By Sterlingtimes 19th Jun 17, 3:57 PM
    • 1,345 Posts
    • 3,755 Thanks
    Sterlingtimes
    • #9
    • 19th Jun 17, 3:57 PM
    • #9
    • 19th Jun 17, 3:57 PM
    How much do you earn? You can only contribute a maximum of 100% of your gross income this year.
    Originally posted by Laycity
    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.
    Solar installed 21 November 2014 > Centre of England > 3,780 Wp > 14 *270 Watt Trina panels > 14 * Enphase micro-inverters > managed by Enlighten Envoy Hub > 19° west of south > 35° pitch > tree shading to east > iBoost > Wattson Anywhere monitoring > Ovo Smart Gateway > Schneider Electric (Drayton) MiGenie smart thermostat.
    • Sterlingtimes
    • By Sterlingtimes 19th Jun 17, 3:58 PM
    • 1,345 Posts
    • 3,755 Thanks
    Sterlingtimes
    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.
    Originally posted by jamesd
    Thank you, jamesd. Great advice from you as usual! I will bear this in mind.
    Solar installed 21 November 2014 > Centre of England > 3,780 Wp > 14 *270 Watt Trina panels > 14 * Enphase micro-inverters > managed by Enlighten Envoy Hub > 19° west of south > 35° pitch > tree shading to east > iBoost > Wattson Anywhere monitoring > Ovo Smart Gateway > Schneider Electric (Drayton) MiGenie smart thermostat.
    • Spreadsheetman
    • By Spreadsheetman 20th Jun 17, 10:28 AM
    • 49 Posts
    • 35 Thanks
    Spreadsheetman
    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.
    Originally posted by jamesd
    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)
    • EdSwippet
    • By EdSwippet 20th Jun 17, 12:36 PM
    • 555 Posts
    • 520 Thanks
    EdSwippet
    ... 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.
    Originally posted by Spreadsheetman
    It is nevertheless best avoided. Remember that even though you pay a tax charge on the over-contribution, when time comes to withdraw the balance from the pension it will be taxable a second time.

    If your tax liability exceeds £2k you could use 'scheme pays' to extract the tax charge from the pension. In that case you can still end up with a worse outcome than had you not made the over-contribution, but not as bad as the double-tax case otherwise.
    • honestash62
    • By honestash62 21st Jun 17, 3:15 AM
    • 41 Posts
    • 2 Thanks
    honestash62
    carry forward
    if you have a pension plan for eg say 10 yrs
    then you can carry forward from the last 10 yrs ??


    yes you can only go back 3 yrs to see what you did not use and add to this years BUT
    If you have only put a token £1000 in a pension for the last ten yrs surely you have loads to carry over
    in 2010 you would be carrying over from the previous 3 yrs and do the same the next up to now you would build up a large amount ? the figure of 40 k allowance was much higher in the last 10 yrs


    yes or no
    • bigadaj
    • By bigadaj 21st Jun 17, 6:28 AM
    • 10,318 Posts
    • 6,614 Thanks
    bigadaj
    if you have a pension plan for eg say 10 yrs
    then you can carry forward from the last 10 yrs ??


    yes you can only go back 3 yrs to see what you did not use and add to this years BUT
    If you have only put a token £1000 in a pension for the last ten yrs surely you have loads to carry over
    in 2010 you would be carrying over from the previous 3 yrs and do the same the next up to now you would build up a large amount ? the figure of 40 k allowance was much higher in the last 10 yrs


    yes or no
    Originally posted by honestash62
    No, three years is the limit.
    • AnotherJoe
    • By AnotherJoe 21st Jun 17, 9:54 AM
    • 7,385 Posts
    • 7,918 Thanks
    AnotherJoe
    if you have a pension plan for eg say 10 yrs
    then you can carry forward from the last 10 yrs ??


    yes you can only go back 3 yrs to see what you did not use and add to this years BUT
    If you have only put a token £1000 in a pension for the last ten yrs surely you have loads to carry over
    in 2010 you would be carrying over from the previous 3 yrs and do the same the next up to now you would build up a large amount ? the figure of 40 k allowance was much higher in the last 10 yrs


    yes or no
    Originally posted by honestash62
    No because your allowance over the last 3 years doesn't increase by adding in what you could have paid in previous years to those. It's locked at £40k max for each year. You can't say (for example) ah I have £40k from 2013 plus £39k from 2012 making £79k. You are locked at £40k.
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