Annual allowance carry over

vulcanrtb

Hi all,

I'm trying to work out how much I can contribute this year tax efficiently. I have all of my contributions detailed on my pension provider's website, but they don't provide a 'carry forward' calculator, so it's a manual process for me.

Is it a simple matter of totalling contributions from 6th April 2015 (say) to 5th April the following year? so for instance if I contributed 20000 in 2015, 30000 in 2016 and 2017 then I could contribute over 40000 in 2018?

Lastly, is all this automatic in terms of tax, I don't have to notify the tax office of my attempt to use unused allowance from previous years?

Thanks!

Paul_Herring

https://www.gov.uk/tax-on-your-private-pension/annual-allowance

If you use all of your annual allowance for the current tax year (6 April to 5 April) you can carry over any allowance you did not use from the previous 3 tax years. Carry over unused allowance from the earliest tax year first.

Note that in order to use the carry-over, you have to have earned however much you're considering contributing during the tax year during which you make the contribution. For, specific, example, if you haven't earned more than £40,000 in the current tax year, you cannot carry over anything this tax year.

https://www.gov.uk/government/publications/pensions-tax-charges-on-any-excess-over-the-lifetime-allowance-annual-allowance-special-annual-allowance-and-on-unauthorised-payments-hs345-self/hs345-pension-savings-tax-charges-2017

You don’t need to make any claim to HMRC to carry forward unused annual allowance and you don’t need to show this on your tax return if your unused annual allowance means that an annual allowance charge isn’t due.

hugheskevi

HMRC have a calculator you should be able to use for this -

https://www.tax.service.gov.uk/pension-annual-allowance-calculator

What you outline is the broad approach, remembering to include employer contributions too, but whether your pensions are Defined Contribution or Defined Benefit makes a difference, as does what the Pension Input Period prior to 2015/16 was. If you have taxable income over £110,000 in 2016/17, 2017/18 or 2018/19 that is another complication you would need to take account of (tapered Annual Allowance).

Easiest approach is to obtain a Pension Saving Statement from all your pension providers and use the HMRC calculator.

Reluctantpensioner

A second vote for the calculator. I used this in 2016. The calculations were complex then because in 2016 they changed the definition of the tax year for pension contributions! (I think YE to FYE)
So if 2016 is being used for carry forward, I strongly advise you use it.
Its also a valuable report to refer to if someone questions you. My provider, quite rightly, warned me that contributing more than £40K in one year needed to be looked at.