Previous years unused pension

Dazed_and_C0nfused

Not quite.

Relief at source pension contributions do not reduce your taxable income, they increase the amount of your basic rate tax band.  Which in turn can reduce the amount of intermediate and higher rate tax payable.

If you contact HMRC now they will adjust your tax code for 2020:21.

If you wait till the tax year ends they will check the tax you have paid and refund any excess.  That refund will come to you, either by bank transfer (you do the transfer on your Personal Tax Account after getting HMRC's calculation) or by cheque if you don't do the bank transfer.

It would be useful to know roughly what you expect your P60 for 2020:21 to show.

spock007

Also here's a weird one. 
What if by paying money into my pension, I push my salary down to £38k...
I'm allowed to pay the £40k, right? 
But in this case I'm allowed to pay no extra into SIPP? 

spock007

I expect that for 20/21 my taxable earnings (after pension contributions etc) will be in the region £38-44k.
Gross earnings will be ~£70k or so. 

I'm not sure if I can carry forward pension allowance to the tune of £38k or because I'll have already paid £40k this year, my net has to be > £40k in order for me to contribute.

Dazed_and_C0nfused

spock007 said:

Also here's a weird one. 
What if by paying money into my pension, I push my salary down to £38k...
I'm allowed to pay the £40k, right? 
But in this case I'm allowed to pay no extra into SIPP? 

I think you need to start again.

You are aware of the annual allowance limit?

A SIPP contribution does not reduce your taxable income.  Do you mean contributions to your employer's scheme would reduce your salary to £38k?

spock007

Annual allowance is £40k into pension. OK sorry, that is decoupled from all of this.
Yes, my contributions to employer's scheme reduces my taxable salary to around £38k min, worst-case. 

I think this means I can still carry forward £38k worth of carry-forward pension..  I think.....


This link says you can't get tax relief on pension contributions in excess of (taxable?) earnings: 
https://www.pensionbee.com/pensions-explained/pension-contributions/pension-carry-forward-rule

Does this mean that:
- I've salary sacrificed so my £40k into employer pension is fine and dandy. 
- I get relief on ~£38k net taxable salary (see below). 
--->>> I am able to get tax relief via carry forward on that £38k (assuming I had that amount to carry forward)?

Dazed_and_C0nfused

If you only have taxable income of £38k how are you expecting, even if Scottish resident for tax purposes, to get any higher rate tax relief on the SIPP contribution?

Might be worth a read

https://adviser.royallondon.com/technical-central/pensions/contributions-and-tax-relief/member-contributions-tax-relief-and-annual-allowance/

spock007

I'm not expecting higher rate of relief on it - only if I get a big bonus in January which pushes me back above the higher band. 

But in this instance.... I believe it's sounding like I can carry forward that £21k of unused allowance because my taxable salary is £38k.

Oof this hurts my brain! I think a simpler way of saying it is that if I get £70k gross salary, I can put the whole £70k into pension if all my allowances allow that (e.g. if I have max carry forward). 

Good link, thank you. I think I'm set...... sorry for being so persistent