SIPP Allowance for 2015/16

TheTracker

The ambiguity around carry forward seems unusually tilted toward the punter. This is Osborne. It must be an error in the "plain English" version.

Anyway, I'm jolly glad I didn't listen to the "timing" doom mongers and filled 40k in April, looks like I've got another 40k opportunity but will check with my accountant whether it can carry forward to future years.

westy22

It certainly all 'looks' to be positive - I suppose we will have to wait a little while before the final version of the rules is approved.

These allowance increases will take a bit of the sting out of the new dividend taxes which will hit me hard as I currently pay myself via a small salary and a large dividend.

Here we all are celebrating a small bonus in pension allowance when it seems like only yesterday when we could tuck more than £250,000 per year away in our pensions - oh well, plus ca change.

TheTracker

Indeed the explanatory notes to the finance bill clarify a maximum of 40k may be carried from 15/16 and it is reduced by all amounts contributed in the pre and post alignment periods. The most you can carry forward is 40k. Westy could carry forward 30k to 16/17 if he doesn't make any contributions in the post alignment period. The sum total is the benefit is to anyone who made contributions in the 9 weeks or so before the budget. Such contributions were effectively "allowance free". So Westy he 10k allowance free and myself 40k.

"New subsection (8) sets out the amount of unused annual allowance that can be carried forward to future years from 2015-16. For those not subject to the money purchase annual allowance, the maximum that can be carried forward is the amount of unused annual allowance in the pre-alignment tax year, subject to a maximum of £40,000, less any amount of this used up in the post-alignment tax year."

Sadly the plain English version doesn't say so.

This makes the most logical and equitable sense to me and can't think of any improvements to fairness.

Or I could still be wrong.

arbster

TheTracker wrote: »

Indeed the explanatory notes to the finance bill clarify a maximum of 40k may be carried from 15/16 and it is reduced by all amounts contributed in the pre and post alignment periods.

I didn't read it like this. The key sentence is, I think (my highlighting):

For those not subject to the money purchase annual allowance, the maximum that can be carried forward is the amount of unused annual allowance in the pre-alignment tax year, subject to a maximum of £40,000, less any amount of this used up in the post-alignment tax year.

The pre-alignment tax year annual allowance was £80k. So if you made £10k of contributions in the pre-alignment period, you get to carry £40k into the post-alignment period. If you make £30k of contributions in the post-alignment period, you have £10k of the annual allowance remaining and would be entitled to carry that forward into 2016/17.

arbster

TheTracker - I note from the rest of your post that you appear to have calculated the carry-forward based on the pre-alignment period being irrelevant, so it's just your first sentence that I am querying.

TheTracker

arbster wrote: »

TheTracker - I note from the rest of your post that you appear to have calculated the carry-forward based on the pre-alignment period being irrelevant, so it's just your first sentence that I am querying.

Ah! Having read it again, I suspect you are right and you can carry forward from the pre-alignment period? This is what HL say "CARRY FORWARD FROM 2015/16 TAX YEAR Subtract any contributions registered from 6 April 2015 to 8 July 2015 from £80,000. If higher than £40,000, treat as £40,000. Then subtract any contributions made from 9 July 2015 to 5 April 2016. The result is the amount available to carry forward from 2015/16."

Here is the bill itself see the very end of the doc section 228C, I'm afraid I can't compute the effect of those words

kidmugsy

westy22 wrote: »

Here we all are celebrating a small bonus in pension allowance when it seems like only yesterday when we could tuck more than £250,000 per year away in our pensions - oh well, plus ca change.

The public interest justification for being able to add an unconstrained quarter million is invisible to me. No wonder it was changed.