SIPP Carry Forward allowance

happybagger

HI. can someone clarify, I have stopped working during this year, I know I can contribute up to 100% of my salary (part year was only about £10k), and then can go back and add to the last three years under carry forward rules. Well at least that was what I thought until I read this on ii:

Even with carry forward, you cannot contribute more than you have earned in a tax year.

Does that mean more than I earned in the year in which I am physically contributing (ie this year), or in the year I am contributing for (ie 3 years ago?

To explain more, if the three previous years I earned 25k in each but total contributions (employer, employee, tax relief) were 5k in each year, could I now put 3x16k (+3x4k tax relief) in, or am I limited due to only earning 10k this year?

Thanks

TcpnT

Sorry. You are limited to the earnings only in the year in which you make the contribution. So 10k

Albermarle

Also to be clear that is £10K gross . So you can add £8K and the pension provider will add £2k tax relief.
This carry forward issue confuses many people and there are hundreds of similar posts on the forum .
It only really affects  relatively high earners who have a high enough salary to make a big contribution.

happybagger

Yes cheers both, looked at other platforms explanations and they were clearer than ii. Looks indeed like it's for those earning 40k+ it benefits, as you have to use current year max first.

I got the 8k +2 as well.

Pity as I'd come into a few quid lol. Looks like just this year's allowance then

Dazed_and_C0nfused

6 April will soon come round again though 

Albermarle

happybagger said:

Yes cheers both, looked at other platforms explanations and they were clearer than ii. Looks indeed like it's for those earning 40k+ it benefits, as you have to use current year max first.

I got the 8k +2 as well.

Pity as I'd come into a few quid lol. Looks like just this year's allowance then

You could always invest it outside the pension , in a S&S ISA . Or pay off a mortgage , or increase your cash savings etc

squash18

Good calculator here 

https://www.hl.co.uk/pensions/contributions/carry-forward-rule/annual-allowance-calculator

happybagger

Dazed_and_C0nfused said:

6 April will soon come round again though 

Yes, but I will be limited to 3600 (2880 net) as will not be employed

happybagger

Albermarle said:

happybagger said:

Yes cheers both, looked at other platforms explanations and they were clearer than ii. Looks indeed like it's for those earning 40k+ it benefits, as you have to use current year max first.

I got the 8k +2 as well.

Pity as I'd come into a few quid lol. Looks like just this year's allowance then

You could always invest it outside the pension , in a S&S ISA . Or pay off a mortgage , or increase your cash savings etc

Indeed, S&S ISA will be the main target, existing RS accounts for some cash, not had a mortgage for 15 years so that's sorted

squash18

happybagger said:

Albermarle said:

happybagger said:

Yes cheers both, looked at other platforms explanations and they were clearer than ii. Looks indeed like it's for those earning 40k+ it benefits, as you have to use current year max first.

I got the 8k +2 as well.

Pity as I'd come into a few quid lol. Looks like just this year's allowance then

You could always invest it outside the pension , in a S&S ISA . Or pay off a mortgage , or increase your cash savings etc

Indeed, S&S ISA will be the main target, existing RS accounts for some cash, not had a mortgage for 15 years so that's sorted

I don’t understand the answers here to be honest as I’m just learning 
My circumstances I only earns £3000 this year but I can back and because I earned £10000 last year and £30000 the year before so I can still put a fair bit in before April according to that calculator I found 
Hope I’m right 

YorkshireBoy

squash18 said:

happybagger said:

Albermarle said:

happybagger said:

Yes cheers both, looked at other platforms explanations and they were clearer than ii. Looks indeed like it's for those earning 40k+ it benefits, as you have to use current year max first.

I got the 8k +2 as well.

Pity as I'd come into a few quid lol. Looks like just this year's allowance then

You could always invest it outside the pension , in a S&S ISA . Or pay off a mortgage , or increase your cash savings etc

Indeed, S&S ISA will be the main target, existing RS accounts for some cash, not had a mortgage for 15 years so that's sorted

I don’t understand the answers here to be honest as I’m just learning 
My circumstances I only earns £3000 this year but I can back and because I earned £10000 last year and £30000 the year before so I can still put a fair bit in before April according to that calculator I found 
Hope I’m right 

I think you'll find you're limited to £3.6K gross in the current tax year, regardless of what you earned in the previous two years.
Did you read the notes on the calculator link you provided? See last page, 2nd para.