Pension contribution currently unemployed

daddydodo

HI, I was made redundant in Aug'19 and have not worked since. I have paid almost £40k gross into my pension for this tax year. I have unused annual allowance from the previous 3 years having paid approx £20k gross per year. Do the rules allow me to contribute a further £60k as per my unused allowane when I am unemployed? I'm not planning on working any more.

Asghar

daddydodo wrote: »

Do the rules allow me to contribute a further £60k as per my unused allowane when I am unemployed? I'm not planning on working any more.

It all depends on how much you have earned this tax year which ends April 2020.

How much did you earn from April 19 to Aug 19, was it at least £40k to cover the contributions you have made this tax year?

Albermarle

As above, the unused annual allowance only comes into play if you have sufficient earned income in this tax year , to take advantage of them .

daddydodo

Thanks for the replies. I earned £30k which was 4months salary plus 3months PILON. I have paid in £30k into my pension this tax year. My salary was ~£53k and for the 3 previous tax years I paid £22k/pa gross into my pension including employer contribution.
Am I able to use the previous 3 years allowance as carry over?

BoGoF

The maximum you can get tax relief on is your gross earnings. If your total earnings 19/20 were £30,000 and you have paid £40,000* you have already obtained too much tax relief and some will need to be paid back.

*Your OP says £40k but your most recent £30k?

jamesd

daddydodo said: Am I able to use the previous 3 years allowance as carry over?

No. You are allowed, subject to the annual allowance:

1. unlimited employer contributions, usually via salary sacrifice or into a defined benefit pension.
2. gross personal contributions equal to gross pay in the tax year of the pension contribution. Carrying forward of pay from previous years isn't allowed.

The two are added together and annual allowance calculations done. Unlike pay, unused annual allowance from the past three years can be carried forward.

If you had 30k gross pay and made 40k of gross personal pension contributions, tell the pension firm and ask for a "refund of excess contributions lump sum". There's no penalty, just the refund.