Back-date private pension against higher earning years

dannysheard

Hi there


First time post, so please be gentle


I've just completed my wife's self-assessment tax return and last year (2013/14) she made a private pension lump sum payment.


This has increased the higher rate threshold for the year, but she wasn't exceeding it this year anyway.


However, she was exceeding it in 2010/11 when she was full-time, and I had in my head that it would automatically back-date the threshold increase to when it was 'needed' (i.e. it would effectively give her back the tax she paid at the higher rate a few years ago).


Any thoughts?




Cheers


Daniel

MoneySavingUser

No I'm afraid that it does not.

You can carry back some other things like gift aid I think but not pension conts.

dannysheard

Thanks for the reply.


Is there an option to include the pension contribution in my self assessment instead, as I have paid some tax at 40% this year, but my wife hasn't?


I know that's a bit of a long shot, but hey, sometimes is kind


P.S. we will definitely plan this a bit better next time

jem16

dannysheard wrote: »

Is there an option to include the pension contribution in my self assessment instead, as I have paid some tax at 40% this year, but my wife hasn't?

No you cannot claim for a contribution you didn't make.

dannysheard

Just an update on this (and to share the knowledge), I've spoken with the self assessment people, and I can write to them and ask them to 'allocate' my August 2013 pension contribution against any year in the last four, so I can ask them to use it for the 2010/11 year, which is what I needed (phew)

mike5678

dannysheard wrote: »

Just an update on this (and to share the knowledge), I've spoken with the self assessment people, and I can write to them and ask them to 'allocate' my August 2013 pension contribution against any year in the last four, so I can ask them to use it for the 2010/11 year, which is what I needed (phew)

So if in 2011/12, 2012/13 and 2013/14 my earnings was £2k over the 40% rate I can make £6k of pension payments now to attract full 40% tax relief from those previous years? Sounds too good to be true?

Daniel54

dannysheard wrote: »

Just an update on this (and to share the knowledge), I've spoken with the self assessment people, and I can write to them and ask them to 'allocate' my August 2013 pension contribution against any year in the last four, so I can ask them to use it for the 2010/11 year, which is what I needed (phew)

I fear you have misunderstood

You can bring forward unused allowance from the past three years/pension input periods to make pension contributions above the £40k annual allowance in the open tax year

You cannot contribute more than your annual earned income in the year the contribution is made

You can only claim tax relief against earned income in the year the contribution is made.You cannot retroactively allocate that contribution to an already closed tax year

Sorry to be the bearer of bad news

jem16

dannysheard wrote: »

Just an update on this (and to share the knowledge), I've spoken with the self assessment people, and I can write to them and ask them to 'allocate' my August 2013 pension contribution against any year in the last four, so I can ask them to use it for the 2010/11 year, which is what I needed (phew)

As has been said, no you cannot.

That rule is for the carry-forward allowance so either you have misunderstood or the person you spoke to at HMRC has misunderstood what you were asking.

thenudeone

Daniel54 wrote: »

You can only claim tax relief against earned income in the year the contribution is made.You cannot retroactively allocate that contribution to an already closed tax year

Agreed.

It used to be possible many years ago when there were much lower limits on contributions as a % of income, but when the limit was lifted to 100% of income, the ability to carry forward allowance was removed.

dannysheard

Hmmm, I'm doubting myself now...


The first person I spoke to didn't know about what I was suggesting, so she put me onto a supervisor who told me I could do it.


I did ask her the question a few different ways, including "...so, if my wife paid £15k pension contribution in August 2013, she can update her 2010/11 tax return as that was the year she paid 40% tax?" to which she said yes, but it would have to be in writing, as you can only update the prior year (2012/13) online.


Let's see

jamesd

Pension tax relief is now only available for the tax year in which the pension payment was made. You can't do what you're asking about, either online or in paper form. Unfortunate that HMRC's people you're speaking with have been saying something else but that's life and they do get it wrong sometimes.