What happens if you accidentally pay more than 80% of your income into a SIPP?

jamesd

What you're supposed to do is tell the pension fund the gross income and ask them to pay a "refund of excess contributions lump sum". It's routine that sometimes estimated income is too high and because you can't pay in after the end of the tax year you seek a refund instead.

itsmeagain

Secret2ndAccount said:

DT2001 said:

In the past I have put in a lump sum in Nov/Dec for 80% of expected earnings and then put in a balancing amount in March when I know pretty much the final figure.

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Also be aware, if your wife received any SEISS (1, 2, or 3) that counts as business income, and is eligible as income for pension tax relief purposes. The income must be declared in her April 2021 tax form (which you will probably complete later in 2021), so that pension contribution would need to be made before April 5th 2021.

I agree but as you may know, there's lots of confusion about self employed grant 3 and 4 wrt 'significant' reduction and if you include the grants as part of income for the purpose eligibility of 3 & 4. There's another big thread on this confusion and the absurdity of it all. It's one of the reasons that people could easily 'over-pay' pension contribution and not realise until the HMRC clarify the rules after everyone has claimed the grant, paid their pension and grant adjustments are retrospectively made after the HMRC have finally decided what the rules should have been!

itsmeagain

jamesd said:

What you're supposed to do is tell the pension fund the gross income and ask them to pay a "refund of excess contributions lump sum". It's routine that sometimes estimated income is too high and because you can't pay in after the end of the tax year you seek a refund instead.

Thanks - that's what I was looking for....