NHS Pension- Annual Allownace/Pension Releif

toothdoctor

Hi all
I am Just after a bit of advice from you knowledgeable crowd regarding annual allowance and pension contribution relief with respect to the NHS pension scheme. I am a self-employed member of the 1995 and 2015 scheme. I have 10 years in the 1995 scheme and an active member of the 2015 scheme. I am considering opening a SIPP to bridge the gap between 60, when I can claim my 1995 pension and (currently) 68 when I can claim my 2015 pension (I am 39 yo) From what I understand my annual allowance is calculated on the growth of my pension in the tax year. The growth in my 2015 scheme was approx. 30K and my 1995 about 6K (2018/2019 tax year). So from this is it correct that I can only contribute 4K to a SIPP and claim tax relief (assume I have no carry forward and earnings are under 110K) on the contributions?
Also regarding my superannuation contributions to the 2015 scheme, I contribute about 12.5K a year. It is my understanding that I put this figure on my self- assessment tax return to receive the tax relief and not the 36K pension growth figure. Is this also correct? I have also been contributing to a LISA as I have been unsure on this matter, as a higher rate tax payer I know that contributing to a pension is better than a SIPP due to the tax relief so keep to maximise my tax breaks.
Thanks

stoozie1

Hi,

My OH is in the same boat as you, and I do the finances, and don't find one year's pension input amount to be a very good predictor of the next year's. The thing that's helping me judge how much to tell him to put in is his available carry forward from the last 3 years. If the SIPP is a recent thing, do you have any of that left?

toothdoctor

I haven't started to contribute to a sipp yet. Just been going through the figures ,still can't calculate the input amounts despite following the formula given by the NHS pensions division. Wish they did an online calculator where you can put your NHS pensionable earning in and that would give you your input values(with associated workings out). Received my AA statement today and calculated I have about 18k in unused allowance over the past 3 years. I understand that you must use the current years allowance first before the previous years

Sibbers123

You are still relatively young regarding pensions and with the level of your contributions I would keep one eye on the lifetime allowance (although it is a nice problem to have)!

zagfles

toothdoctor wrote: »

Hi all
I am Just after a bit of advice from you knowledgeable crowd regarding annual allowance and pension contribution relief with respect to the NHS pension scheme. I am a self-employed member of the 1995 and 2015 scheme. I have 10 years in the 1995 scheme and an active member of the 2015 scheme. I am considering opening a SIPP to bridge the gap between 60, when I can claim my 1995 pension and (currently) 68 when I can claim my 2015 pension (I am 39 yo) From what I understand my annual allowance is calculated on the growth of my pension in the tax year. The growth in my 2015 scheme was approx. 30K and my 1995 about 6K (2018/2019 tax year). So from this is it correct that I can only contribute 4K to a SIPP and claim tax relief (assume I have no carry forward and earnings are under 110K) on the contributions?

Yes and bear in mind that the PIA (pension input amount) is very sensitive to the inflation figures used, so can vary a lot year to year as your scheme probably uses a different inflation figure to revalue than HMRC use.

Also regarding my superannuation contributions to the 2015 scheme, I contribute about 12.5K a year. It is my understanding that I put this figure on my self- assessment tax return to receive the tax relief and not the 36K pension growth figure. Is this also correct?

Isn't it already taken off your pay before tax is applied? In which case you don't declare it at all, you already get tax relief through your payslip. Check your payslips and see how much the "taxable to date" changes one month to the next.

I have also been contributing to a LISA as I have been unsure on this matter, as a higher rate tax payer I know that contributing to a pension is better than a SIPP due to the tax relief so keep to maximise my tax breaks.
Thanks

As above the LTA could become an issue. But who knows how things will have changed by the time you retire...

toothdoctor

zagfles wrote: »

Isn't it already taken off your pay before tax is applied? In which case you don't declare it at all, you already get tax relief through your payslip. Check your payslips and see how much the "taxable to date" changes one month to the next.

I am self employed so not PAYE so no tax is deducted from my payslip. I declare my earnings and pension contributions on SA form and pay the required tax in the January/ July

stoozie1

Your PIA from the previous tax year is usually sent in the next monthish, my OH receives his to his practice address.

zagfles

toothdoctor wrote: »

I am self employed so not PAYE so no tax is deducted from my payslip. I declare my earnings and pension contributions on SA form and pay the required tax in the January/ July

Not sure how that works - sounds like a very odd setup where you're self employed but effectively have an occupational pension! Maybe someone familiar with your scheme will be along...but for tax relief purposes it should be the amount you contribute not the PIA. But you need to know whether the contribution is on a RAS basis (where the scheme claims basic rate tax relief) or not, as there are different boxes for RAS and for gross conts on the SA form and it's important you get this right.

andy001

I am assuming that OP is self employed dentist contractor like GPs.
Be safe in Covid era as dentists too are at high risk of catching COVID at work!!
OP: Firefighters case/Maccloud verdict may apply to NHS pension too soon- Please watch the space..
Some changes expected in coming years to public sector pensions from the verdict and likely covid effect too.
As stated by others, keep an eye on LTA as you're very young!
Regarding Self assessment, worth getting an opinion from your accountants if already not sought.