Overpayment into SIPP

eyeonretirement

I have overpaid into my sipp by mistake and even with carry forward I have exceeded my allowance by £6727. I am employed and have never filled in a tax return. Do I need to inform the inland revenue and fill a full tax return or will they eventually see the over-payment and adjust my tax code? If I have to fill in a tax return it looks daunting and I may use someone to do this for me. Has anyone used the companies that advertise online and can they recommend one.

TIA

Linton

If it is in this tax year I believe you can ask your SIPP provider to undo the excess contribution.

You do not need to inform HMRC, they will find out. The mistake should not lead you to having to fill in a tax return.

eyeonretirement

I asked Interactive Investor and they did not offer to undo excess contribution  A relief that I do not have to fill in a tax return. Thank You.

itsmeagain

Is it the £40k you have exceeded or your Salary that you exceeded? Have you more than one pension where the combination of both have caused the issue?
I know someone that exceeded the £40k limit (inc roll back) who earned around £85k PA. They paid DB & DC amounts totalling £40k but didn't realise that they hadn't calculated the effective DB contribution properly, so it worked out as £52k. 2 years later, he has heard nothing from HMRC.
Anyways, I asked a similar question to yours for a self employed person who wanted to put ALL their salary in a SIPP, but wouldn't know how much their salary was until months after the pension contribution year ended (when they did their tax return). I got this reply from jamesd - thanks!.... 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.

zagfles

Linton said:

If it is in this tax year I believe you can ask your SIPP provider to undo the excess contribution.

You do not need to inform HMRC, they will find out. The mistake should not lead you to having to fill in a tax return.

Both paragraphs wrong.

You can't get a refund of pension contributions in excess of the AA. You DO need to tell HMRC if you are liable to an AA charge. See https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm056200

zagfles

itsmeagain said:

Is it the £40k you have exceeded or your Salary that you exceeded? Have you more than one pension where the combination of both have caused the issue?
I know someone that exceeded the £40k limit (inc roll back) who earned around £85k PA. They paid DB & DC amounts totalling £40k but didn't realise that they hadn't calculated the effective DB contribution properly, so it worked out as £52k. 2 years later, he has heard nothing from HMRC.
Anyways, I asked a similar question to yours for a self employed person who wanted to put ALL their salary in a SIPP, but wouldn't know how much their salary was until months after the pension contribution year ended (when they did their tax return). I got this reply from jamesd - thanks!.... 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.

It's important to understand that the above link refers to the tax relief limit (ie 100% of earnings or £3600). The rules for the annual allowance are completely different. If you exceed the AA with carry forwards you can't get a refund and need to declare it to HMRC. If you don't they'll eventually find out and could probably fine you for failing to declare.

eyeonretirement

I have unused carry forward allowance but earned 41,115 last tax year. I contributed 36,000 net of tax relief and my employer contributed 8193. So the limit is my earnings and the carry forward that I have cannot allow me to contribute more than the 41,115? Do I need to make a full tax return or can I  just inform them of the excess contribution? Interactive Investor did not say they could offer "refund of excess contributions"

zagfles

You seem to be unsure what limit you exceeded. Your OP said you've exceeded the allowance with carry forwards, now you say you have carry forwards available. You now seem to say you've exceeded the tax relief limit but you mention employer conts which have no relevance to the tax relief limit. The tax relief and annual allowance are separate limits with different rules  it's explained every week here, have a search. The consequences of exceeding the limits are totally different as above.