Pension - investment from previous years / Carry Forward

2stixoftwix

I need some help understanding Pensions

I have 2 pensions, a sipp and a very old with profits pension.
Combined they are valued at about £130,000 (£40,000 in the sipp)

I also own my own company - husband and wife team - 2 directors 50/50 . Husband is 70 and retired.

He has state pension and Gov pension and draws dividends only from the company once a year

I have minimum salary (£9250) and also draw dividends once a year.
over the last 3 years these are my pension contributions from my personal savings and company

March 17 £6,400 - personal
March 18 £20,000 - company
October 18 £6,700 - personal
March 19 £40,000 - company

I understand that I can invest £40,000 from my company each year
I understand that I can only invest £7400 (ish) from my personal allowance due to my low salary

I also understand I can carry forward £40,000 per year

So technically I can carry forward £120,000 + £40,000 from this year = £160,000
So far from the figures above I have invested £60,000 from the company & £13,100 from my personal savings
This means that I can still invest around £86,900 this financial year

This year we have had a really profitable year

1) I only have a small personal pension allowance due to my low wages
2) My accountant has told me if I invest £86,000 into my pension via the company contribution - eyes would be "possibly" raised at HMRC (because my husband would get only £6,000 in dividends )
3) Accountant has told me to leave a lump sum in the company for contingency

My questions
The £40,000 per year - This is both personal and company pension investment combined?

Due to my low personal wage - can personal pension contributions exceed my allowance to take advantage of the 3 year carry forward figure

Does HMRC question excessive (but legal) allowances

I'm all a bit confused
Thanks

Albermarle

The £40,000 per year - This is both personal and company pension investment combined?

Yes and includes any tax relief added to the pension , so your £73K figure for contributions is too low as no tax relief is included.

Due to my low personal wage - can personal pension contributions exceed my allowance to take advantage of the 3 year carry forward figure

You can only contribute gross maximum what you have earned this tax year. Previous years are irrelevant .

jamesd

2stixoftwix wrote: »

I understand that I can invest £40,000 from my company each year

Provided you made no personal contributions or had carry-forward available.

2stixoftwix wrote: »

I understand that I can only invest £7400 (ish) from my personal allowance due to my low salary

You can make gross (after tax relief added) personal contributions of the whole £9,250 gross salary. Which means that £7,400 net. You use the gross for annual allowance calculations.

2stixoftwix wrote: »

So technically I can carry forward £120,000 + £40,000 from this year = £160,000

No. Technically you:

1. have 40,000 for this year's allowance, which isn't called carry-forward.

2a. We don't know if allowance was available from 2015-16. This can be used towards your 2018-19 excess.
2b. In 2016-17 you used £6,400 (but must use gross if that is net). If it's gross then you had £33,600 to carry forward.
2c. In 2017-18 you used £20,000 and had £20,000 to carry forward.
2d. In 2018-19 you used £46,700 (assuming the personal is gross). This exceeds the annual allowance by £6,700 so you had to use carry-forward from 2015-16, 2016-17 or 2017-18, oldest first.

Depending on whether you had 2015-16 carry-forward available to cover the 2018-19 excess you could have had available to use this year:

A. as much as 40,000 + 33,600 + 20,000 = 93,600
B. as little as 40,000 + 33,600 + 20,000 - 6,700 = 86,900

2stixoftwix wrote: »

2) My accountant has told me if I invest £86,000 into my pension via the company contribution - eyes would be "possibly" raised at HMRC (because my husband would get only £6,000 in dividends )

HMRC are unlikely to care, and your husband being retired (assuming mostly from the company too) explains the difference.

2stixoftwix wrote: »

The £40,000 per year - This is both personal and company pension investment combined?

Yes.

2stixoftwix wrote: »

Due to my low personal wage - can personal pension contributions exceed my allowance to take advantage of the 3 year carry forward figure

You are only entitled to pension tax relief on gross personal contributions up to your gross pay. If you go over, tell the pension company and ask for a "refund of excess contributions lump sum". It's routine, no penalty, many years to get around to it.

2stixoftwix wrote: »

Does HMRC question excessive (but legal) allowances

They are allowed to but apparently don't.

2stixoftwix

Thanks
I had forgotten my personal contribution was net of tax

paulshears

I was forced by a pension company to take a £1500 per year (Gross) pension at age 62. 
I am now 66 and I do not draw any other pension although I am entitled to draw both the state pension and a second large private pension. 
Can I still invest £40,000 from each of the last three years when I made no contributions at all as I was building up a business? 
Thanks 
Paul 

jamesd

As long as you have enough eligible income and the 1500 is annuity or defined benefit. Pension income doesn't count towards what you can pay in..