Annual Pension Allowance and Carry Forward question

vishaljh

All,

Before I start, I want to let you know that I have read several threads and tried to clarify as much as I can before coming to you experts for an opinion. I am not just creating a new thread to save my time and waste your time.

Basically, I am a high rate tax payer and been so for several years. My company pays into a company pension scheme with Standard Life and this is non-contributory and hence I have not paid my own money into pension for several years now. This is the first time I have some savings and thinking of utilizing this to pay into pension pot.

What I have done so far -

1) I have been doing SA for several years now.

2) I have calculated all relevant pension allowances for current year and going back all the way to 2015/2016.

3) I have topped up as much as I can for this year.

4) I am going to top-up for 2015/16 and this is where i have some questions.

If I understand correctly after reading all other threads -

1) I have a c/f pension allowance of 31k for 2015/16.

2) I make a payment of £24800 to the pension provider and they will add £6200 as basic tax relief (standard life provides relief as source).

3) when I do my tax returns for this year, I capture - gross amount I have paid for 2018/19 + amount paid in relation to 2015/16 as single amount and I will get additional tax relief as refund of some sorts. I think I am clear on this.

The issue is that for the tax year 2015/16, all my Tax free allowance was originally used up as my salary was around 35k. If I now pay additional pension of gross 31k which is related 2015/16, I may be eligible for some Tax free allowance for 2015/16. (note: company's contribution to the pension pot was circa 8k in this year)

However, I don't see a way for me to specify to HMRC that "please assign this 31k to 2015/16 and recalculate my tax calculations for that year so that I can get some of my tax free allowance back which will result in smaller tax bill for 2015/16". How can I go about doing this and reclaiming some of my tax free allowance for 2015/16?

Sorry if this is not clear. Happy to answer any specific questions you may have to help me further on this. Thanks in anticipation.

Albermarle

Although you can carry forward unused allowance , you can only claim back tax relief in the current tax year and you can not claim back more tax relief than you actually paid.
So no possibility to start recalculating your 215/2016 tax bill.

Dazed_and_confused

4) I am going to top-up for 2015/16 and this is where i have some questions.

You cannot pay into a pension retrospectively like that.

3) when I do my tax returns for this year, I capture - gross amount I have paid for 2018/19 + amount paid in relation to 2015/16 as single amount and I will get additional tax relief as refund of some sorts. I think I am clear on this.

There is no specific pension tax relief. Your gross contribution which qualifies for tax relief increases the amount of basic rate tax you can pay and this in turn reduces the the amount of intermediate or higher rate tax payable. That is how this benefits you as far as your personal tax liability is concerned.

The issue is that for the tax year 2015/16, all my Tax free allowance was originally used up as my salary was around 135k. If I now pay additional pension of gross 31k which is related 2015/16, I may be eligible for some Tax free allowance for 2015/16. (note: company's contribution to the pension pot was circa 8k in this year)

You cannot pay into a pension now and claim tax relief for 2015:16

However, I don't see a way for me to specify to HMRC that "please assign this 31k to 2015/16 and recalculate my tax calculations for that year so that I can get some of my tax free allowance back which will result in smaller tax bill for 2015/16". How can I go about doing this and reclaiming some of my tax free allowance for 2015/16?

You can't.

vishaljh

Thanks a lot to you both for your input. This clarifies a lot. This is all very confusing and have been reading a lot but never 100% sure until now.