Carry Forward Pension Allowance

paddytt

Hi Everyone
I'm a little confused by the 3 year carry forward rule for Pension allowances.  Here is my situation: 

• In 2019, I earned £10,230 and I did not make any payment into my SIPP, but a total of £496.09 (inc tax relief) was paid into my Nest pension.

• In 2020, I will not have any earnings and I have not made any pension payments yet.

How much can I pay into my SIPP in 2020, and take full advantage of my carry forward allowances? 
If I got it right, for 2019 I can pay in £10,230 - 496.09 = £9,733.91 (inc Tax relief of £1,622.31); plus £3,600 (inc £720 tax relief) for 2020 - assuming I don't earn anything. 
That would mean a cash payment into my SIPP of £8,111.59 + £2,880 = £10,991.59.  Is that correct?  

thanks

JoeCrystal

£3,600 gross is the answer. You cannot take advantage of your carry forward allowances since you must make the maximum allowable contribution in the current tax year (£40,000 in 2020/21) at first. Since you have no earnings this tax year at the moment, you cannot make use of it as far as I can see. I might be wrong, though. 

ratechaser

Plus your carryover isn't limited by what you earned in the prior year, only what you earn in the year you're planning to use it.

In other words, IF you had earnings of about 80k+ this year, then you'd be able to pay in this year's £40k and then another 40k, less the small NEST contribution, as your 2019 carryover.

And that's before considering any carryover you might be able to use from the 2 prior years.

but you have to be earning this year, otherwise it's all a moot point

ColdIron

Before you can use Carry Forward you must have exhausted your current year's Annual Allowance (£40,000) first so you cannot use Carry Forward at all. As you have no relevant earnings this year you can make a Gross contribution of £3,600, £2,880 from you and £720 tax rebate

jamesd

For 2019-20 tax year you can pay in nothing more because that tax year has finished. For 2020-21 you can pay in 2880 net.

paddytt

thanks for all the great advice guys!