Question re pension contributions carry forward

BoxerfanUK

Workerbee999 wrote: »

Can’t she open a SIPP and put in whatever can’t go through March payroll to make use of the full carry forward amount?

Thanks for that suggestion Workerbee999 I hadn't thought of that.

I have no experience of SIPPS so if this is an option can anyone suggest whom and what I could do this with quickly, cheaply and efficiently?

Workerbee999

I’m no expert, but I opened one with Hargreaves Lansdown on line very easily when I was trying to optimise my tax and contributions at the end of last tax year. You can pay money in straight away by debit card. I don’t believe they are the cheapest platform but are user friendly. There are others to choose from though.

They automatically claim the 20% tax relief and although it doesn’t come for a few weeks it is still counted in the tax year that your contribution falls into, and it tells you how much in total relates to that tax year that you can then use as info to claim back the other 20% as a tax refund.

You don’t even have to choose which funds you want to invest in straight away as it is when the cash arrives that is important. So you could leave it uninvested while you take your time choosing which funds you want - there a lot of threads to help you research that.

BoxerfanUK

Workerbee999 wrote: »

I’m no expert, but I opened one with Hargreaves Lansdown on line very easily when I was trying to optimise my tax and contributions at the end of last tax year. You can pay money in straight away by debit card. I don’t believe they are the cheapest platform but are user friendly. There are others to choose from though.

They automatically claim the 20% tax relief and although it doesn’t come for a few weeks it is still counted in the tax year that your contribution falls into, and it tells you how much in total relates to that tax year that you can then use as info to claim back the other 20% as a tax refund.

You don’t even have to choose which funds you want to invest in straight away as it is when the cash arrives that is important. So you could leave it uninvested while you take your time choosing which funds you want - there a lot of threads to help you research that.

Thanks for that, bearing in mind this would be to utilise carry forward from 2015/16 tax year, if my OH (who is a 40% tax payer) were to go this route I presume there is a way via either a SA tax return or calling HMRC that she could claim back the other 20% as a refund. Would I be correct?

jamesd

Yes, it's a relief at source personal pension and works as I described earlier.

Snakey

With apologies to the OP for the hijack (but it might be relevant to you too), I'd like to jump in with a new question because I'm worried now!

My understanding is that salsac'd amounts are "employer" pension contributions and are treated as made when received/ credited to your account by the pension fund. The date your salary (from the gross of which a related amount may have been deducted under a contractual agreement between you and your employer) is paid is not relevant.

If that's correct, a salsac change put through the March payroll run would reduce your taxable income for 2018/19 but would likely be received by the fund after 5 April (when I check my Standard Life account, it shows them coming in on about the 10th of each month) - too late to soak up any unused relief from 2015/16. The payment would instead start to use the AA for 2019/20.

If I'm talking nonsense, which I often am (and in particular I've never got my head round the two counter-intuitively named types of salsac, so maybe it's that), please will somebody set me straight asap! My own planning over the next couple of years makes heavy use of the above assumption re: March contributions.

BoxerfanUK

Snakey wrote: »

With apologies to the OP for the hijack (but it might be relevant to you too), I'd like to jump in with a new question because I'm worried now!

My understanding is that salsac'd amounts are "employer" pension contributions and are treated as made when received/ credited to your account by the pension fund. The date your salary (from the gross of which a related amount may have been deducted under a contractual agreement between you and your employer) is paid is not relevant.

If that's correct, a salsac change put through the March payroll run would reduce your taxable income for 2018/19 but would likely be received by the fund after 5 April (when I check my Standard Life account, it shows them coming in on about the 10th of each month) - too late to soak up any unused relief from 2015/16. The payment would instead start to use the AA for 2019/20.

If I'm talking nonsense, which I often am (and in particular I've never got my head round the two counter-intuitively named types of salsac, so maybe it's that), please will somebody set me straight asap! My own planning over the next couple of years makes heavy use of the above assumption re: March contributions.

That's a very good point snakey. I recall last year my OH's pension contribution for July didn't go in until August and funny enough that was Standard Life at the time. Any views on this appreciated.

zagfles

Snakey wrote: »

With apologies to the OP for the hijack (but it might be relevant to you too), I'd like to jump in with a new question because I'm worried now!

My understanding is that salsac'd amounts are "employer" pension contributions and are treated as made when received/ credited to your account by the pension fund. The date your salary (from the gross of which a related amount may have been deducted under a contractual agreement between you and your employer) is paid is not relevant.

If that's correct, a salsac change put through the March payroll run would reduce your taxable income for 2018/19 but would likely be received by the fund after 5 April (when I check my Standard Life account, it shows them coming in on about the 10th of each month) - too late to soak up any unused relief from 2015/16. The payment would instead start to use the AA for 2019/20.

If I'm talking nonsense, which I often am (and in particular I've never got my head round the two counter-intuitively named types of salsac, so maybe it's that),

What do you mean by that? What 2 types are there? If you're referring to "net pay", that is NOT sal sac.

please will somebody set me straight asap! My own planning over the next couple of years makes heavy use of the above assumption re: March contributions.

The HMRC manual (links below) seems to say that "net pay" conts are the date of deduction from pay, RAS conts are the date the payment is actually made, but it doesn't mention sal sac, why would it as those are employer conts so I can't believe it's anything other than when the contribution is actually paid by the employer. But I might be wrong. Have you asked the scheme for a statement of pension input amounts for previous years? That should tell you.
https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm053200#IDAG0WKD
https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm041000

Snakey

Dunno, just illustrating my confusion really.

I only started making contributions to this scheme last year so I don't yet have a completed tax year for which to request a certificate. All I have to go on is what I see when I log in plus memories of some research I did a few years ago. Me not being able to confirm it for sure is not much help to the OP, admittedly, but better to at least raise it now rather than have him back here in January 2021 to say he's been hit with a surprise AA charge for 19/20 and it's all our fault.

It's looking, then, as if the OP has a choice between making salsac conts and waving goodbye to the 15/16 AA, or setting up a quick SIP for a one-off cont (an area I know nothing about) and losing the benefits of salsac.

The former is a non-starter to the extent that it goes over the available CY AA if using up the old AA was the only reason for the extra conts.

The latter might not be too terrible since most of the sacrifice would have only saved NI at 2%, although if the employer does a kick-back of the employers conts as well then the lost opportunity might sting a bit (my advice is try not to dwell on it. I've frequently been a day late and a dollar short with my cunning plans. These things happen to the best of us!).

One final thought: enough years at £40k a year is going to give you some serious LTA issues, so in the absence of any employer uplifts etc you might be better off just salsaccing yourself below the £100k and leaving it at that. No point saving 42% on the way in if you're paying 55% on the way back out. (Blah blah caveat caveat rules might change before you get there etc)


Oh, an edit-before-posting: of course your gross monthly pay wouldn't be high enough to make a one-off £27k or whatever it was, so a SIP would have been needed either way. You'd have had to have come up with the idea several months ago to have got it all done via salsac - the March-in-April thing is only part of the problem.

BoxerfanUK

Snakey wrote: »

The former is a non-starter to the extent that it goes over the available CY AA if using up the old AA was the only reason for the extra conts.

Sorry snakey not sure what you mean by this, what's CY AA?

Snakey wrote: »

The latter might not be too terrible since most of the sacrifice would have only saved NI at 2%, although if the employer does a kick-back of the employers conts as well then the lost opportunity might sting a bit (my advice is try not to dwell on it. I've frequently been a day late and a dollar short with my cunning plans. These things happen to the best of us!).

Yep, me too!!

Snakey wrote: »

One final thought: enough years at £40k a year is going to give you some serious LTA issues.

LTA is not an issue as she plans to retire in 3 years and her pot will only be around 320K plus even with maxing things out to that date. Unfortunately the fact that I have a good DB pension sort of took any focus from either of us to her pension until about 3 years ago so we are trying to play catch up.

Snakey wrote: »

Oh, an edit-before-posting: of course your gross monthly pay wouldn't be high enough to make a one-off £27k or whatever it was, so a SIP would have been needed either way. You'd have had to have come up with the idea several months ago to have got it all done via salsac - the March-in-April thing is only part of the problem.

As jamesd said, I should have thought about it months ago. TBH I'd sort of written off trying to play catch up for that year but only just of late thought that maybe it was worth doing.

Even though it's very late in the day we are going to try a combo of Salsac and a SIPP this month if we can.

BoxerfanUK

Hi all,

Firstly many many thanks for everyone's comments on this thread my OH has now successfully made a combination of a single contribution to her employer pension DC scheme and a salary sacrifice for this month down to minimum wage which covers her unused allowance from 2015/16 and part of her unused allowance from 2016/17.

She has had the 25% uplift from the pension provider added for the single contribution so all she has to do now is reclaim the higher rate tax element from HMRC. She's going to try to phone HMRC to see if it can be reclaimed that way rather than having to go through SA.

Regarding her unused allowance from 2015/2016. At the time her total contribution for that year including employers was £5,064.29 which left any unused amount of £34,935.71. However, can I just check did I get that right? as it seems that year was split into two and I'm a bit confused as to whether she could actually have had more unused allowance than that although it seems a bit confusing when I try to read up on it.

To break it down;

6/4/15-8/7/15 contributions were £1,160.25 and 9/7/15-5/4/16 contributions were £3,904.04

At the time her employer pension provider was Standard Life and the scheme PIP was 9th May to 8th May. In July 2015 the PIP was moved to 9/7/15 - 5/4/16 and aligned to tax year after that, as were all schemes I believe.

Any comments gratefully received