Using unused allowance (carry forward)

fuelcrusher

double post

jem16

fuelcrusher wrote: »

So does this PIP only apply to the allowance/carry forward calculations or should you be using this also for declaring your pension contributions to reclaim the higher rate tax? I've just been telling hmrc my contributions April to March.

Pension contributions for tax relief only align with the tax year.

gadgetmind

jem16 wrote: »

Pension contributions for tax relief only align with the tax year.

Yes, and these are based on when they come from your pay packet rather than when they hit your pension, which is different to how it works for Annual Allowances.

This all came in as part of "Pensions Simplification"!

fuelcrusher

gadgetmind wrote: »

Yes, and these are based on when they come from your pay packet rather than when they hit your pension, which is different to how it works for Annual Allowances.

This all came in as part of "Pensions Simplification"!

That's how I submitted most of my self assessments. The money left my pay on the 23rd and reached my pension about 14th - 16th the following month.
I changed last year though because the statement the pension managers send us shows when it enters the pension april to march (the april being the previous march pay).

Question though, how is that different to how it works for annual allowances? Are you referring to this PIP? or does it run to when the money hits the pension rather than leaves your pay?

Ta again.

gadgetmind

Annual Allowances use PIPs whereas tax relief is based on in which tax year you pay into the pension.

The exact PIP for each scheme used to depend on when the first payment ever went into it. So you could have a PIP ending in (say) September, so every payment between the *exact* dates of the PIP would be deemed to have gone into the pension on the last day of the PIP for Annual Allowance purposes.

Given that different schemes could have (and often would have) different PIPs, and that with complex restrictions you could move a PIP forwards by ending it early, fun tricks could be played but it all took a lot of care and planning.

Clearly this was all madness, so HMG gave everyone a one time chance to switch their PIP to align with the tax year (which the complex rules didn't actually permit!) and new schemes were also deemed to have tax year aligned PIPs. Some people took advantage of this, but some didn't (I didn't as it was worse for me.)

What they have now done it ended everyone's PIPs for them 3 months into this tax year, hence the mini PIP, and aligned them all from now on. This in most cases gives people more allowance for this tax year.

fuelcrusher

Thanks again. I'll have to ask the question at work to be sure but by the sound of things I'll easily be ok because of the relatively low payments three years ago.

EdSwippet

gadgetmind wrote: »

Yes, and these are based on when they come from your pay packet rather than when they hit your pension, which is different to how it works for Annual Allowances.

It sounds like you've researched this. Do you have an authoritative source on this that you can point me to?

I've never been able to find one, and I'm in this 'straddle' situation with my June paycheque deduction and pre/post July budget mini-PIPs. Thanks.

gadgetmind

EdSwippet wrote: »

It sounds like you've researched this. Do you have an authoritative source on this that you can point me to?

I read a lot of HMRC material, but the best "all in one" I found is a Friends Life document that I now can't find online.

Try here.

https://dl.dropboxusercontent.com/u/433250/Friends-Life-PIP-explanation.pdf

It predates the £40k allowance, reduction after £150k, and "mini PIP" changes.

EdSwippet

gadgetmind wrote: »

I read a lot of HMRC material, but the best "all in one" I found is a Friends Life document that I now can't find online.

Thanks. I read through this -- well, up to the point where my eyes glazed over and I started to lose the will to live -- but couldn't quite fathom where it covered the delay between the point money is withheld from paycheque and the point this money appears as an investment inside the pension.

Pay date was 25th June, and some chunk was withheld for pension. Inside the pension I see that this amount turned into a 'pension contribution' on 13th July. So is this counted as a pre- or post- 8th July budget pension input? (This isn't a general problem on year end because I see that the pension company takes special care that a 25th March contribution appears as a contribution before the upcoming April 6th; always a shorter-than-usual delay there).

Clearly I have no control whatsoever over the delay between when my paycheque is docked for pensions and when this amount appears in the pension itself. It's regularly a few weeks. On this occasion those few weeks cross an unanticipatable PIP change event, again something over which I have no control of timing.

Probably best if I check this with the pension provider themselves. I doubt I'm the only person in this position, though. So much for pension 'simplification'...

gadgetmind

EdSwippet wrote: »

couldn't quite fathom where it covered the delay between the point money is withheld from paycheque and the point this money appears as an investment inside the pension.

See the diagram on page 4. All contributions to the pension during the PIP are deemed to have been paid in on the last day of the PIP for Annual Allowance purposes.