If my pension has decreased in value during a tax year, does it affect the carry over allowance?

joep2

If the 40K I paid into my pension over the previous tax year decreases in value by 20k, can I contribute 60K in the following tax year without incurring additional tax? Thanks.

hugheskevi

No.

The Annual Allowance is based on contribution, not pot value.

Dazed_and_C0nfused

No, the value of your pension fund isn't relevant.  It's the amount contributed which determines any unused allowance available to carry forward.

Asghar

No, it's how much you contribute, not what happens to the value afterwards.

Where did that idea come from?

Dazed_and_C0nfused

Asghar said:

No, it's how much you contribute, not what happens to the value afterwards.

Where did that idea come from?

Wishful thinking 😁

Aretnap

If that was the case, presumably the flip side would be that if your pension increased in value by a large amount one year, you wouldn't be able to pay in much, if anything, the next year. That would be a bit rubbish. Especially as pensions increase in value much more often than they decrease in value - the overall effect would be to make it harder to save for retirement (as well as a nightmare from an accounting point of view).

The way it actually works is that money inside your pension is invisible for most tax purposes. The taxman sees money going in and money coming out - what happens to it in between has no effect at all on your allowances or tax status, for better or worse. (The exception is if your pension is big enough to be subject to the lifetime allowance, which is a nice problem to have). 

ColdIron

Nice try