Pension Annual Allowance and Tax Return

London1000

Good evening all! I have a question on annual allowance and carry forward rule. My annual allowance per year for last 3 financial years is as below:
Tax Year - Annual Allowance / Actual Saved in Pension
2016/17 - 40K / 5K
2017/18 - 35K / 10K
2018/19 - 20K / 15K
2019/20 (expected) - 25K / 20K (so far till Feb 2020)

• So if I want to max out my carry forward, I guess the total annual allowance for current and last 3 years is 40 + 35 + 20 + 25 = 120K
• Till Feb 2020, I have contributed 50K to my pension in these 4 years
• So (at least theoretically), if I wanted to use this remaining 120K - 50K = 70K allowance, then by the end of the 2019/20 tax year, if I were to contribute 70K in a pension scheme, then that will be OK. Is that the right interpretation of the rules?

Separately, if I use a SIPP rather than employer pension, then in the above example, is it fair that I will just need to contribute GBP 37,100 to the SIPP and the remaining 32,900 (i.e. 47% of 70,000) will be automatically contributed? On this, my SIPP provider says they will only provide basic 20% tax relief - do you know how I would go about getting the remaining tax relief?

Many thanks for your help

London1000

adding one more question if I may, in Jan 2019 (i.e. in 2018/19 tax year), I had contributed 5K (this is the amount of actual cash I had transferred) to my private SIPP and they increased the value to 6,250 assuming basic tax relief. In my tax year that I recently filed for 2018/19, I didn't take this into account. Which means I have overpaid tax. Do you know how I can adjust so that I am not overpaying anymore? Thanks a lot

Dazed_and_C0nfused

London1000 said:

adding one more question if I may, in Jan 2019 (i.e. in 2018/19 tax year), I had contributed 5K (this is the amount of actual cash I had transferred) to my private SIPP and they increased the value to 6,250 assuming basic tax relief. In my tax year that I recently filed for 2018/19, I didn't take this into account. Which means I have overpaid tax. Do you know how I can adjust so that I am not overpaying anymore? Thanks a lot

Do you mean you have filed a Self Assessment return for 2018:19 and failed to include a personal contribution to your SIPP?

If so you will need to amend your return and your Self Assessment calculation will be adjusted to increase the amount of your basic rate tax band by £6,250.  Which in turn can reduce the amount of higher rate tax payable.

Dazed_and_C0nfused

London1000 said:

Good evening all! I have a question on annual allowance and carry forward rule. My annual allowance per year for last 3 financial years is as below:
Tax Year - Annual Allowance / Actual Saved in Pension
2016/17 - 40K / 5K
2017/18 - 35K / 10K
2018/19 - 20K / 15K
2019/20 (expected) - 25K / 20K (so far till Feb 2020)

• So if I want to max out my carry forward, I guess the total annual allowance for current and last 3 years is 40 + 35 + 20 + 25 = 120K
• Till Feb 2020, I have contributed 50K to my pension in these 4 years
• So (at least theoretically), if I wanted to use this remaining 120K - 50K = 70K allowance, then by the end of the 2019/20 tax year, if I were to contribute 70K in a pension scheme, then that will be OK. Is that the right interpretation of the rules?

Separately, if I use a SIPP rather than employer pension, then in the above example, is it fair that I will just need to contribute GBP 37,100 to the SIPP and the remaining 32,900 (i.e. 47% of 70,000) will be automatically contributed? On this, my SIPP provider says they will only provide basic 20% tax relief - do you know how I would go about getting the remaining tax relief?

Many thanks for your help

Without knowing how much your pensionable earnings are it's impossible to know.

You contribute 89% of the gross contribution.  The pension company then adds the basic rate tax relief.  You are not entitled to any additional fixed amount.  The gross contribution simply increases the amount of your basic rate tax band.  Which can then reduce the amount of higher rate tax payable but the exact benefit depends on your personal tax circumstances.

For example if you contribute £70k gross you will pay £56k to the pension company and they add £14k to give you £70k.  Your basic rate band is increased by £70k from £37,500 to £107,500.  But if you are only earning say £80k then you are only paying higher rate tax on £30k so the amount of higher rate tax relief will be limited, you won't get a tax refund of another £14k.