Previous years unused pension

Alexland

spock007 said:

Yes I get salary sacrifice through work but only at source (if that's the correct terminology). They wont give any extra salary sacrifice if I voluntarily add, I believe. 

I think you might be confusing Salary Sacrifice (to save national insurance) with employer contribution matching.
Salary sacrifice works before a Net Pay payroll arrangements where the pension contribution happens before calculation of tax and NI liability. Relief at source is used for SIPPs etc where you contribute taxed/NId income and you only save the tax. Obviously sal sac is better than relief at source even if there is no further employer matching.

spock007 said:

I'm under 40 and have considered LISA, yes. But have to take money out at 60, right? 

You can leave it invested in the S&S LISA wrapper it's just the early withdrawal penalty that stops at 60. Have a look at EQi who seem to be the cheapest LISA for funds at the moment.

spock007

Alexland apologies you're 100% correct, I was getting them confused. 
Thanks for the info. I might just do that re the LISA as I actually have £800 ISA allowance left this year (I said £20k as was easier than saying £19.2k).

spock007

Which says that I must be a member of a UK Registered pension scheme:
https://www.which.co.uk/money/pensions-and-retirement/personal-pensions/contributing-to-a-private-pension-explained/how-the-pensions-annual-allowance-works-ac8d33u9v9ch

Does this mean that my carry forward allowance has to go into said pension scheme (mine is Scottish Widows) or can I invest it into a SIPP I create next week? Thank you!

spock007

I do apologise - last question (been doing this for ages on a Sunday morning and brain now fried) - if I have say £10k left of 40% band allowance.... is it the case that I put in £10k in order to get £6.6k back from government (and then that's the £10k 40% allowance used up) or do I put in £6k and the government adds £4k (and then that's the £10k 40% allowances used up)? I think it's the first one.

Dazed_and_C0nfused

spock007 said:

I do apologise - last question (been doing this for ages on a Sunday morning and brain now fried) - if I have say £10k left of 40% band allowance.... is it the case that I put in £10k in order to get £6.6k back from government (and then that's the £10k 40% allowance used up) or do I put in £6k and the government adds £4k (and then that's the £10k 40% allowances used up)? 

You are overcomplicating things somewhat.

What do you want to end up in your pension fund?

spock007

I have multiple unused allowance. 

2017-2018 is the biggest and the 40% amount that is there unused is £8400 (thats the amount over the 40% band I paid 40% tax on).

So if I only took that year and that band I think that if I put (8400/0.6 = ) £14k into HL SIPP, I can claim back £14k - £8.4k = £5.6k in 40% pension relief. Is that correct?


I specifically want to put this into a new SIPP and not my pension provider of the last 5+ years - I'm now sure if that's allowed.

Dazed_and_C0nfused

spock007 said:

I have multiple unused allowance. 

2017-2018 is the biggest and the 40% amount that is there unused is £8400 (thats the amount over the 40% band I paid 40% tax on).

So if I only took that year and that band I think that if I put (8400/0.6 = ) £14k into HL SIPP, I can claim back £14k - £8.4k = £5.6k in 40% pension relief. Is that correct?


I specifically want to put this into a new SIPP and not my pension provider of the last 5+ years - I'm now sure if that's allowed.

You seem to be missing a crucial point which has been mentioned in previous responses.

You cannot get tax relief in any year other than the tax year you make the pension contribution in.  You could have been paying 45% tax in 2017:18 but it is utterly irrelevant.

Once you say how much you want to go into your pension fund then the rest can be explained.

spock007

Oh so does that mean I only get the relief that is available to me 20/21 tax year? If so then that is massively unfortunate because I purposefully increased my contributions the last few years to push me down into 20% band. It was only in 2017-2018 that I paid a lot of 40% tax - so it sounds like I can't claw back 40% relief on that. 


For the last 3 tax years, plus this one, I am short £46k which I can put into pension. This is the total amount which, if paid in, will take me to max £160k for the four years including this one. 

spock007

I REALLY appreciate the help btw. 
So it sounds like I can carry forward allowance but the RELIEF from previous years is not applicable. 
It's only the relief in THIS year that counts. 
While not as financially beneficial, this makes the calculation MUCH easier.

I'd been sitting drawing up a huge spreadsheet, too - total headache lol!!


Very roughly... unused allowance: 
17/18 = 25k
18/19 = 16k
19/20 = 4k
20/21 = 1k

So although I've paid £40k this year (pretty much) into work pension, I am free to open up a SIPP and dump £25k TOTAL into it to use up 17/18 allowance (the £25k includes tax relief added in).

I believe an additional rule is that total contributions (max always being £40k) must not exceed salary for each of those tax years which I want to carry forward for. In all cases I earned over £40k.

Is this correct? What if I earned £40k in 17/18 and put £40k into SIPP... that would completely eat into the personal allowance for that year.

Dazed_and_C0nfused

spock007 said:

Oh so does that mean I only get the relief that is available to me 20/21 tax year? If so then that is massively unfortunate because I purposefully increased my contributions the last few years to push me down into 20% band. It was only in 2017-2018 that I paid a lot of 40% tax - so it sounds like I can't claw back 40% relief on that. 


For the last 3 tax years, plus this one, I am short £46k which I can put into pension. This is the total amount which, if paid in, will take me to max £160k for the four years including this one. 

Only if you paid relief at source pension contributions in 2017:18