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Recycling Rules
WYSPECIAL
Posts: 786 Forumite
Can anyone give an opinion on how much I will be able to pay into pension schemes in 2022-23 without falling foul of recycling rules? It's not pre planned but that, to me, seems the hardest part to prove!
2018-19 I paid in £29,500. I was took redundancy towards the end of that tax year and at the time only really intended to work part time going forwards.
2019-20 paid in £9,300. I was only working part time that tax year.
2020-21 paid in £20,200. Enjoyed the part time job more than I expected so when the opportunity arose part way through the year to go full time I took it. Not needing the income I increased pension contributions.
2021-22 paid in £24,300 working full time. During this tax year I started taking benefits from a DB scheme and was paid a PCLS of £67000. I used part of this to clear a Mesher Order which was coming up to a trigger date. The remainder is currently held as Premium Bonds.
2022-23 Was intending paying in a similar amount to last year but then, unexpectedly, another job opportunity came up so my earnings will be approx. £10k more than last year and more than I planned for. I would now like to increase my pension contributions this year to reflect this unexpected pay rise.
If I do so will it raise suspicion of recycling? Or will I be ok even if it is questioned as I can demonstrate the increase is related to a salary increase?
2018-19 I paid in £29,500. I was took redundancy towards the end of that tax year and at the time only really intended to work part time going forwards.
2019-20 paid in £9,300. I was only working part time that tax year.
2020-21 paid in £20,200. Enjoyed the part time job more than I expected so when the opportunity arose part way through the year to go full time I took it. Not needing the income I increased pension contributions.
2021-22 paid in £24,300 working full time. During this tax year I started taking benefits from a DB scheme and was paid a PCLS of £67000. I used part of this to clear a Mesher Order which was coming up to a trigger date. The remainder is currently held as Premium Bonds.
2022-23 Was intending paying in a similar amount to last year but then, unexpectedly, another job opportunity came up so my earnings will be approx. £10k more than last year and more than I planned for. I would now like to increase my pension contributions this year to reflect this unexpected pay rise.
If I do so will it raise suspicion of recycling? Or will I be ok even if it is questioned as I can demonstrate the increase is related to a salary increase?
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Comments
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Can anyone give an opinion on how much I will be able to pay into pension schemes in 2021-22 without falling foul of recycling rules? It's not pre planned but that, to me, seems the hardest part to prove!
Without a TARDIS nothing.
Should that say 2022-23?0 -
To be considered as recycling HMRC need to show that your actions meet all the specified criteria. See https://techzone.abrdn.com/public/pensions/tech-guide-recycle-tax-free-cash for example, there are several other similar documents elsewhere.
A key criterion is that you took the PCLS with the objective of recycling it. In your case it would appear that you took the PCLS as part of starting the DB pension and to make the Mesher payment.
Another criterion is that the extra contribution represents at least 30% of the PCLS. You are not proposing to increase your normal contributions by that amount.
And a third - the contribution is significantly larger than might be expected. which again does not seem to be the case.
So it seems to me that recycling is not an issue.1 -
It should indeed!Dazed_and_C0nfused said:Can anyone give an opinion on how much I will be able to pay into pension schemes in 2021-22 without falling foul of recycling rules? It's not pre planned but that, to me, seems the hardest part to prove!
Without a TARDIS nothing.
Should that say 2022-23?0
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