Question re pension contributions carry forward

zagfles

BoxerfanUK wrote: »

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

No you didn't do it right. The way it worked previously was PIAs counted in the tax year in which the PIP ended, not the tax year the contributions were made in. That's why a change was needed to align them to tax years.

The PIP which started 9/5/2014 ended on 8/5/2015 as this was the scheme PIP.

The next PIP would have started 9/5/2015 and ended on 8/7/2015 because that's when the govt made the change.

Both the above count in the pre-alignment mini-tax year. That's why there was an £80k allowance in the pre-alignment year.

So you need the pension input from 9/5/2014 to 8/7/2015, not 6/4/15-8/7/15 as you quoted above.

If this is less than £40k, then you can ignore it, and the carry forwards from the 2015/16 tax year available is £40k minus the post-alignment PIA.

BoxerfanUK

zagfles wrote: »

No you didn't do it right. The way it worked previously was PIAs counted in the tax year in which the PIP ended, not the tax year the contributions were made in. That's why a change was needed to align them to tax years.

The PIP which started 9/5/2014 ended on 8/5/2015 as this was the scheme PIP.

The next PIP would have started 9/5/2015 and ended on 8/7/2015 because that's when the govt made the change.

Both the above count in the pre-alignment mini-tax year. That's why there was an £80k allowance in the pre-alignment year.

So you need the pension input from 9/5/2014 to 8/7/2015, not 6/4/15-8/7/15 as you quoted above.

If this is less than £40k, then you can ignore it, and the carry forwards from the 2015/16 tax year available is £40k minus the post-alignment PIA.

Thanks Zagfles. Yes I got it wrong, although the figure was way less than 40K so I guess it's made no difference anyway.

BoxerfanUK

jamesd wrote: »

If she has work benefits she won't have a P11D on 7th of April but HMRC accept estimates and she can revise later, just tick the box saying the return includes estimated values and explain at the end. That will get her the tax relief in her bank account a few weeks later.

But if she's not already in the self-assessment system it's better to stay out of it and just use phone calls to tell HMRC what they need to know. Not that it's particularly hard, it's fairly easy for simple cases where you keep the required records so you can declare say the amount of savings account interest you received. I tend to just record that monthly on a spreadsheet that works out my estimated end of tax year position for me.

Hi jamesd, no she's not currently in the SA system. Is there a particular number that she needs to ring? Apart from the amounts she's paid into her pension this year (and any savings interest) is there anything else she needs on hand if she speaks to them? Would she need to make a note of the previous 3 year unused allowance?

Dazed_and_confused

If you (she) decides to not go down the Self Assessment route you can expect HMRC to ask for proof of the pension contributions. There was a detailed post about the process a few weeks back which I'll try and find and post the link to.

You probably don't need to mention salary sacrifice - she isn't paying those contributions, the benefit is seen in the reduced taxable pay on her P60.

One thing you need to be clear about is what relief at source contributions she intends to pay in the 2019:20 tax year. HMRC never allow pension tax relief for one tax year in the tax code of another tax year. But they do update later years tax codes to allow provisional tax relief for the later year on the assumption that similar relief at source contributions will be made. So if she is making a large payment in 2018:19 she will get a refund from HMRC for any higher rate tax relief but this won't be by an adjusted tax code. But they will update her 2019:20 tax code to allow tax relief they think might be due for 2019:20 so you should have that figure to hand (and make it clear if you are giving them the gross amount including the basic rate tax relief given at source).

The 2019:20 tax relief is calculated by reference to her expected income in 2019:20 so you could also have an up to date figure of what you expect her taxable salary to be in 2019:20 (the figure she guesstimates will be on her 2019:20 P60).

Dazed_and_confused

This is the thread i mentioned,

https://forums.moneysavingexpert.com/discussion/5965768/call-hmrc-for-claiming-pension-tax-relief&highlight=pension+tax+relief

BoxerfanUK

Dazed_and_confused wrote: »

If you (she) decides to not go down the Self Assessment route you can expect HMRC to ask for proof of the pension contributions. There was a detailed post about the process a few weeks back which I'll try and find and post the link to.

You probably don't need to mention salary sacrifice - she isn't paying those contributions, the benefit is seen in the reduced taxable pay on her P60.

One thing you need to be clear about is what relief at source contributions she intends to pay in the 2019:20 tax year. HMRC never allow pension tax relief for one tax year in the tax code of another tax year. But they do update later years tax codes to allow provisional tax relief for the later year on the assumption that similar relief at source contributions will be made. So if she is making a large payment in 2018:19 she will get a refund from HMRC for any higher rate tax relief but this won't be by an adjusted tax code. But they will update her 2019:20 tax code to allow tax relief they think might be due for 2019:20 so you should have that figure to hand (and make it clear if you are giving them the gross amount including the basic rate tax relief given at source).

The 2019:20 tax relief is calculated by reference to her expected income in 2019:20 so you could also have an up to date figure of what you expect her taxable salary to be in 2019:20 (the figure she guesstimates will be on her 2019:20 P60).

Hi D&C, If you could find that link that would be great, thank you. She (we) are expecting that will be the only ever relief at source contribution she will pay. For 2019/20 onwards it will all be via salary sacrifice unless the rules change.

The final figure she paid in was £21,045 and this was uplifted by the pension provider by £5,261 to make £26,306 gross.

Dazed_and_confused

Posted it whilst you were replying

Then best make it clear to HMRC that this was a one off event and no similar contributions will be made in 2019:20 or later tax years.

BoxerfanUK

:beer: :beer: :beer:

BoxerfanUK

Dazed_and_confused wrote: »

This is the thread i mentioned,

https://forums.moneysavingexpert.com/discussion/5965768/call-hmrc-for-claiming-pension-tax-relief&highlight=pension+tax+relief

Looks like she will have to write to them as the amount is over 10K. I wonder exactly what detail they will require,, carry forward amounts, gross amount paid etc etc.

Dazed_and_confused

Possibly, which would be much more information than is required on a Self Assessment return.

Where you enter £26,306. Job done. For the pension contribution.