Carry forward allowance - confused about the process!

ELM_Herts

Hi All. I'm going to max out my pension contributions at £40,000 this year due to a surprise back payment from my employer (nice!).  Usually I would put my annual bonus into my pension which, due to this extra payment, would take me over the £40,000 allowance - but I understand I'm still able to do this using unused allowance from previous years.  My question is - how do I do that?  My pension contributions are taken directly from my salary (along with my employer contribution) and paid into my workplace pension.  We are given the option each year to do a bonus sacrifice into the pension fund too. So if I opt in to the bonus sacrifice, is that all I need to do?  Or do I need to fill out a self-assessment if I exceed the annual allowance (even if I'm OK to do so under the carry forward rules)?  I am hearing a lot of conflicting information on the process and I don't to get hit with a tax bill or something.  Thank you in advance for your expert opinions!

AlanP_2

Just pay it in as you would a below £40k annual contribution, so through your employer by the sounds of it.

Keep a personal record of how much you have contributed this tax year and the last 3 so you can demonstrate that c/f covered it in the very unlikely event that HMRC ask you about it.

Albermarle

Also it is possible the pension provider may contact you to warn you that you are going over £40K . You just need to tell them that you understand what you are doing and have unused allowance for previous years.

ELM_Herts

Brilliant, thanks so much for the clarification!

billywhizz1966

Great. I had the same question and e mailed my pension provider today. This answers it and give me peace of mind. Trust they wont tell me any different

trickydicky14

Could I tag on to this conversation of carry forward.

My partner has just been enrolled into nest by her employer. She wishes to put in as much as she can afford as she is running out of time to build a pot.

I know she can only put in up to her annual salary less tax relief but can she also add money from her previous 3 years working.

So, the pension is newly set up and she has not contributed to any form of pension in previous years.

My other concern, the previous 3 years she was self employed for the same company but now on the books is that an issue going forward?

Hope you can help.

Dazed_and_C0nfused

How much will do you think she will earn in the current tax year?

trickydicky14

Current tax year only about £14,000 gross if that helps.

Dazed_and_C0nfused

Yes.  You don't need to give any more thought to carry forward.

She can only contribute a maximum of £14,000 (inclusive of tax relief).

trickydicky14

Thanks for your post, are you saying she can't put anything in for the previous 3 years.

Dazed_and_C0nfused

No one can contribute for previous tax years.

Some people can use carry forward to contribute more in the current tax year but not your wife.

This is worth a read.

https://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/pensions-and-tax/carry-forward