Using Past Allowance

Dazed_and_C0nfused

ifonlyian said:

Thanks, what is behind this, is that i am due to receive several lump sums of personal money in the next 6-18 months & i am thinking if i can carry forward any of the previous years of low pension contributions from when i was a normal paye employee & not a shareholding company director as i am now. so for the previous years the carry forward would come from personal money into the SIPP if possible, not from the business. Failing that, i assume i can not pay myself any dividends & use that money to go into my SIPP & not use my personal money for that purpose?
FY17/18 & FY 18/19 was a paye & employers/employee pension contribution
FY19/20 was a mixture of a paye & employers/employee pension contribution & then topped up with payments from my limited company as it was only formed in June 2019

Before you get ahead of yourself what do you anticipate your pensionable earnings to be in the current tax year?

dunstonh

so for the previous years the carry forward would come from personal money into the SIPP if possible, not from the business.  Failing that, i assume i can not pay myself any dividends & use that money to go into my SIPP & not use my personal money for that purpose?

you take less out of the business (probably only to personal allowance and dividend allowance) and then use the money received to make up the difference to live on.   Then the money you wont be drawing will be available to put into the pension.    

It may need multiple years but that is not an issue as the furthest away year drops off and its the one you fill first in any carry forward calculation.

ifonlyian

Dazed_and_C0nfused said:

ifonlyian said:

Thanks, what is behind this, is that i am due to receive several lump sums of personal money in the next 6-18 months & i am thinking if i can carry forward any of the previous years of low pension contributions from when i was a normal paye employee & not a shareholding company director as i am now. so for the previous years the carry forward would come from personal money into the SIPP if possible, not from the business. Failing that, i assume i can not pay myself any dividends & use that money to go into my SIPP & not use my personal money for that purpose?
FY17/18 & FY 18/19 was a paye & employers/employee pension contribution
FY19/20 was a mixture of a paye & employers/employee pension contribution & then topped up with payments from my limited company as it was only formed in June 2019

Before you get ahead of yourself what do you anticipate your pensionable earnings to be in the current tax year?

as said, for FY20/21 the pensionable earnings will be £12,500

Dazed_and_C0nfused

So carry forward is of absolutely no relevance to you as you cannot contribute more than £12,500 (£10,000 paid by you plus £2,500 basic rate tax relief added through a relief at source scheme).

ifonlyian

dunstonh said:

so for the previous years the carry forward would come from personal money into the SIPP if possible, not from the business.  Failing that, i assume i can not pay myself any dividends & use that money to go into my SIPP & not use my personal money for that purpose?

you take less out of the business (probably only to personal allowance and dividend allowance) and then use the money received to make up the difference to live on.   Then the money you wont be drawing will be available to put into the pension.    

It may need multiple years but that is not an issue as the furthest away year drops off and its the one you fill first in any carry forward calculation.

Yes, this looks like the way to proceed, i will reduce my dividends to leave the money in the business to use for extra pension payments going forward

ifonlyian

Dazed_and_C0nfused said:

So carry forward is of absolutely no relevance to you as you cannot contribute more than £12,500 (£10,000 paid by you plus £2,500 basic rate tax relief added through a relief at source scheme).

i thought if in FY20/21 i make a personal contribution of £10,000 to make £12,500 as above & then add a company contribution of £27,500 to make it to the £40,000 then for FY17/18 i can then make up the shortfall of £36,400 to take it to £40,000 (40000-3600 already contributed?)
or is this not the case?

zagfles

ifonlyian said:

Dazed_and_C0nfused said:

So carry forward is of absolutely no relevance to you as you cannot contribute more than £12,500 (£10,000 paid by you plus £2,500 basic rate tax relief added through a relief at source scheme).

i thought if in FY20/21 i make a personal contribution of £10,000 to make £12,500 as above & then add a company contribution of £27,500 to make it to the £40,000 then for FY17/18 i can then make up the shortfall of £36,400 to take it to £40,000 (40000-3600 already contributed?)
or is this not the case?

Yes. People get confused because they read rubbish like "if you earn under £40k you can't use carry forwards". Even IFAs have said it on here. It's rubbish.

Company contributions are not constrained by the earned income tax relief limit, because company contributions don't get personal tax relief. So your personal contributions are restricted to £12,500 gross, £10k net, but company contributions are not.