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Pension contributions Rollover of 40K limit
Pat38493
Posts: 3,421 Forumite
Does the ability to roll over the previous 3 years allowance apply in reverse is well?
For example if I put in 45k per year during the next 3 years using rollover from previous years, is my allowance in the 4th year 40K or something less?
For example if I put in 45k per year during the next 3 years using rollover from previous years, is my allowance in the 4th year 40K or something less?
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Comments
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No. It's only carry forwards. If you exceed the AA with carry forwards you get taxed, it doesn't affect future years.
1 -
What are your relevant earnings?Pat38493 said:
So to be clear, I could contributezagfles said:No. It's only carry forwards. If you exceed the AA with carry forwards you get taxed, it doesn't affect future years.
Y1 20K
Y2 20K
Y3 20K
Y4 20K
Y5 50K
Y6 50K
Y7 60K
Y8 40K
?I am an Independent Financial Adviser (IFA). Any posts on here are for information and discussion purposes only and should not be seen as financial advice.1 -
Yes. Make sure you include employer contributions (if you're in a DB pension this is complicated). Also bear in mind the tax relief limit (100% of earnings) which is a different thing entirely.
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So to be clear, I could contributeY1 20KAssuming your income (if not company director) is in excess of each years contribution and you are not subject to tapering, that sequence would work
Y2 20K
Y3 20K
Y4 20K
Y5 50K
Y6 50K
Y7 60K
Y8 40K
Y1 20K
Y2 20K
Y3 20K
Y4 20K
Y5 50K - 10k c/f to y2.
Y6 50K - 10k c/f to y3
Y7 60K - 20k c/f to y4
Y8 40K - no c/f available but £40k doesnt require it anyway.Does the ability to roll over the previous 3 years allowance apply in reverse is well?no.
I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.1 -
Thanks all, and yes I am aware that you have to have enough earnings to cover it and it includes the employer contributions.
I also understood from a prior thread that earnings means earnings from employment, so you cannot use things like DB pension income or annuity income for this.0 -
Relevant earnings are covered in this,
https://www.mandg.com/pru/adviser/en-gb/insights-events/insights-library/tax-relief-members-contributions0 -
HMRC have a calculator which might be useful:
https://www.tax.service.gov.uk/pension-annual-allowance-calculator
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