Max Pension Contribution Check

idontknow2

Does anyone know if HMRC has a method of checking maximum pension contributions into your pensions?  I am aware of the 40k max and the I believe you can utilise up to 3 years contribution levels but I am wondering how they/if they check?  I am not looking to over contribute just want to try ensure I don't have to pay tax on anything this year over the 40k max as I was around 30 last year and less the year before that but then prove this some way?  The gov site states you don't need to inform them if you are using unused annual allowances but it seems a bit low-tech?

Dazed_and_C0nfused

just want to try ensure I don't have to pay tax on anything this year over the 40k max as I was around 30 last year and less the year before that

Is it the annual allowance charge you are asking about or the tax you would be paying on your income?

HMRC have details of your pensionable earnings and know how much you have contributed so they can check if you've gone over the annual allowance but the basic principle is that it is your responsibility to monitor it and notify HMRC if you do have a charge to pay.

idontknow2

It was the annual allowance so related to the tax allowance I would get in relation to my contributions to ensure I wouldn't have to pay it back first and then prove it later.  If HMRC do know how much I have contributed then all is fine as I do monitor it so know what I can add in excess this year.  It would be useful if there was the option to pull that information from my HMRC login to confirm things but I guess that will come in time.  
thanks for the response

dunstonh

Does anyone know if HMRC has a method of checking maximum pension contributions into your pensions? 

Yes they do.

I am aware of the 40k max and the I believe you can utilise up to 3 years contribution levels but I am wondering how they/if they check?

It is recorded against your NI number.

The gov site states you don't need to inform them if you are using unused annual allowances but it seems a bit low-tech?

I would consider the fact they use electronic means to monitor it without you needing to tell them is more high-tech than low-tech.

idontknow2

It might be useful if they stated that they did confirm that they did monitor it and perhaps provide that information via the HMRC login so I could verify things.  

thanks for the response though, very helpful :-)

idontknow2

Well, I say helpful but do you have an official reference to confirm your response at all?  This is the internet after all...

Dazed_and_C0nfused

How about this?

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm056200

HMRC are unlikely to publish the precise details of how they monitor this but Wikipedia has some interesting info about their compliance system

https://en.wikipedia.org/wiki/Connect_(computer_system)#:~:text=Connect_is_a_new_social,or_undisclosed_(misdirected)_activity.?wprov=sfla1

zagfles

In case you aren't aware, as it causes so much confusion here, there's another separate limit on tax relief which has nothing to do with the AA, you can't get tax relief on personal/employee contributions of more than 100% of your earnings. For instance if you earn £30k after workplace pension conts are taken off, you can only put in £30k gross into a SIPP (80% of that net). There is NO carry forwards for the tax relief limit. 

NedS

idontknow2 said:

Does anyone know if HMRC has a method of checking maximum pension contributions into your pensions?  I am aware of the 40k max and the I believe you can utilise up to 3 years contribution levels but I am wondering how they/if they check?  I am not looking to over contribute just want to try ensure I don't have to pay tax on anything this year over the 40k max as I was around 30 last year and less the year before that but then prove this some way?  The gov site states you don't need to inform them if you are using unused annual allowances but it seems a bit low-tech?

You can check if you have exceeded your annual allowance and owe any tax using the HMRC calculator here:

https://www.tax.service.gov.uk/pension-annual-allowance-calculator

As others have said above, HMRC computer systems hold detailed records of your contributions so it is trivial for them to see if you have contributed more than your allowances / limits, although ultimately it is your responsibility to pay the tax (and likely can be fined for failing to do so). I imagine the system is highly automated and raises flags against those accounts requiring investigation.

Your employer reports all pension contributions through the Real Time Information (RTI) system and relief at source schemes (SIPP) make an application to HMRC on your behalf for the tax relief to be added so there is no hiding from the tax man in the 21st century.

idontknow2

zagfles said:

In case you aren't aware, as it causes so much confusion here, there's another separate limit on tax relief which has nothing to do with the AA, you can't get tax relief on personal/employee contributions of more than 100% of your earnings. For instance if you earn £30k after workplace pension conts are taken off, you can only put in £30k gross into a SIPP (80% of that net). There is NO carry forwards for the tax relief limit. 

Thank you for this but I earn in excess of the annual allowance and my employer contribution is relatively small.

idontknow2

Thank you for the responses, I do appreciate them.   Also, I agree with @NedS there is no escaping big brother but was just expecting a mechanism to confirm the current status as in 2022 everything is online.  Having said that... when I rang them today and asked them to check a few things they asked me to put it in writing... so as I say "low tech" :-)