Help with private pension for self-employed

ale_ssandra

I am 53 and have been self employed since 2018. I want to start a private pension but I am a bit overwhelmed by it all. What are 100% of qualifying earnings? Are they my total sales or my profits? Also I read that I could clain my qualifying earnings for the last past 3 years if not done before. How would a pension provider know that I want to claim the tax back from the last 3 tax years? I have had a look at Vanguard or Pension Bee pensions. Does anyone have any experience of them or other companies? Thank you so much for your help and advice.

Dazed_and_C0nfused

It's profit not sales.

You can only ever get tax relief for the tax year you make the contribution.

Do you expect to have profits of more than £40,000 in this tax year?

This is with a read

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/annual-allowance-carry-forward/

dunstonh

What are 100% of qualifying earnings? 

Gross profit.

Also I read that I could clain my qualifying earnings for the last past 3 years if not done before.

You would need to have an existing pension and have gross profits in excess of £40,000.

 How would a pension provider know that I want to claim the tax back from the last 3 tax years?

They don't need to know.  It's between you and HMRC.

Marcon

I think this could be right up your street (free and impartial): https://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/self-employed-and-pensions/self-employed-and-pensions-help

ale_ssandra

dunstonh said:

What are 100% of qualifying earnings? 

Gross profit.

Also I read that I could clain my qualifying earnings for the last past 3 years if not done before.

You would need to have an existing pension and have gross profits in excess of £40,000.

 How would a pension provider know that I want to claim the tax back from the last 3 tax years?

They don't need to know.  It's between you and HMRC.

So when does the HMRC add a 20% to my pension? Does the pension provider let them know or do I declare it in my tax return?

Dazed_and_C0nfused

You don't get 20% added, it's 25% (which is 20% of the grossed up amount).

The pension company automatically adds it with a relief at source pension such as a SIPP or personal pension.

You do need to show the contribution on your Self Assessment return although for a lot of people there is no extra tax relief due but if there is the self assessment calculation takes it into account.

ale_ssandra

Dazed_and_C0nfused said:

It's profit not sales.

You can only ever get tax relief for the tax year you make the contribution.

Do you expect to have profits of more than £40,000 in this tax year?

My profit will be much lower tham £40k. Unfortunately your link is for pension advisers only.

Dazed_and_C0nfused

You need to have pensionable earnings (profit) of more than £40k to be able to use carry forward.

Note there is no direct link between the amount of tax you pay and the pension tax relief added to a relief at source pension.

For example if your profits were £10,000 and you had no other taxable income but you could afford to contribute £10,000 to a relief at source pension it would mean you would pay over £8,000 and the pension company would add the £2,000 basic rate tax relief.  Despite you not actually paying any tax.

TVAS

Just because the link is for advisors does not mean the content does not apply so read the content.