Timing of Pension Contribution

Yorkifossil

I gave up work a few months ago, aged 63. I'll live off savings and leave my personal pension untouched until I reach 65.
I earned c. £10k in the current 2016-17 tax year, and believe I can contribute an equivalent sum to my pension and gain tax relief.
Do I need to make that contribution in the current tax year (i.e. the year in which income was earned), or can I contribute it retrospectively in the 2017-18 tax year when I won't have any earnings?

bowlhead99

Yorkifossil wrote: »

Do I need to make that contribution in the current tax year (i.e. the year in which income was earned), or can I contribute it retrospectively in the 2017-18 tax year when I won't have any earnings?

In 2017-18 when you don't have any earnings you could only contribute up to £3600 gross which is the maximum amount for people who have less earnings than that.

In 2016-17 you can contribute the higher figure, of your gross earnings from employment, of c.£10k (although if you have already made some contributions to a workplace scheme you would knock them off the £10k to make sure you didn't pay more than £10k)

What you can't do is decide next year you would like to contribute money that you earned in a previous year and use that previous year's earnings to define the amount you are paying in. You can only pay in £3600 gross during a tax year, unless you have earnings higher than that during the year you're making the contribution.

Yorkifossil

Thanks, Bowlhead - I'd made 'retrospective' payments in previous years, but hadn't realised it was only my ongoing income which entitled me to do that. I'll make the applicable contribution before this tax year ends.