Silly question on pension allowance

samscash

I realise that the pension allowance is £40000 a year. Provided I earn that is that the amount of cash I can put in, or is it the amount that is net of basic rate of tax, so I can only put in £32,000 (ie. [EMAIL="£40000@80%"]£40000@80%[/EMAIL])


thanks

aldershot

£40k is the gross amount you can go in (so £32k from you if you are a 20% taxpayer).

You may of course have unused allowance from previous years.

LXdaddy

And if you are in a Defined Benefit scheme that calculation is much more complex as it is the amount by which the value of your pension has grown, not the amount you have added.

samscash

Thanks. Will revisit my calculation

samscash

So I have overpaid for last year, do I inform both HMRC and the SIPP provider, or just one?


Its a bit late as I have just found out.


thanks

bigadaj

samscash wrote: »

So I have overpaid for last year, do I inform both HMRC and the SIPP provider, or just one?


Its a bit late as I have just found out.


thanks

So long as you haven't contributed more than your earnings then you might be OK as you can contribute more than your allowance if you have carry forward from previous years.

Also last year had two periods for contribution, as Osborne aligned pension Input payments to tax years, so you have £40k to early July and £40k from then to April of this year.

samscash

Unfortunately it's more than earnings and I can't see a way out at all

d70cw6

the stocks for you!

bigadaj

samscash wrote: »

Unfortunately it's more than earnings and I can't see a way out at all

I'd contact the sipp provider first, they will automatically have grossed up your contribution with basic rate tax. See what they say but probably best to also Hmrc and make them aware as soon as reasonably possible.

HappyHarry

So I have overpaid for last year, do I inform both HMRC and the SIPP provider, or just one?


Its a bit late as I have just found out.

You just need to let HMRC know. You could call them, or complete a tax return for last year.

All that will happen is that HMRC will ask you to repay the tax relief that was added to your pension. You may have to pay this from your own pocket.

You are allowed to add more than your earnings to a pension, you're just not entitled to the extra tax relief.

samscash

I don't mind paying the extra. What I don't want to happen is the the provider pays back the tax and I then pay it over. Effectively twice , if you see what I mean