Using Unused Pension Annual Allowance

walterz

Hello, long term reader here, some great info picked up over the years. 
One of the areas which I remain unclear on is utilising Unused Pension Allowances. For the recent years, I have unused allowances of £24K (19/20); £20K (20/21); £21K (21/22): total £65k, these being calculated as £40k allowances less the respective yearly inputs.

With some funds being inherited I would like to invest £50k into a SIPP. I appreciate there will be some further pension input for the current year, with a salary of £30k anticipated.

My question would be, can I open a SIPP with £50k and receive the additional Govt top up making the initial value £62.5k? This would utilise any residual 22/23 allowances and then dip into the prior years unused sums. Or is the most I can contribute in 22/23 simply the £30k salary less the current year inputs?

Thanks for any thoughts / pointers.

Dazed_and_C0nfused

If your salary is only £30k and you are contributing to a DC scheme carry forward isn't going to be something you can make use of in the current tax year.

dunstonh

My question would be, can I open a SIPP with £50k and receive the additional Govt top up making the initial value £62.5k?

You would be opening SIPP with £62,500 with the Government giving you tax relief, making it a net £50k contribution.

 Or is the most I can contribute in 22/23 simply the £30k salary less the current year inputs?

Unless you can get employer contributions, you are limited to a pension contribution of £30k minus what you already pay.    You cannot utilise carry forward if you earn less than £40k unless you can utilise employer contributions.

MX5huggy

£30k, AA is separate from tax relief limit. Your tax relief limit is £30k this year. 

You’re using the word “input” Pension Input Amount is specific term for the increase in value of DB (final salary) pension do you have one of these? 

walterz

Thanks for the clarification all, it is a DB scheme in question - I had suspected any new SIPP contribution was limited to the salary link but some readings elsewhere had created an element of doubt. 

Secret2ndAccount

Just to be totally clear: you can contribute the entire 30k salary. That is, you contribute 24k, and the taxman adds the other 6k. Even if your employer's contribution to your DB takes the total over the 40k annual allowance, that's okay because you can use up previous years' annual allowance.
The first limit is the limit of your contributions. That is equal to your salary (relevant earnings in tech speak). No carry forward.
The second limit is all contributions to your pensions by anyone. That's 40k, with 3 years' carry forward.

Dazed_and_C0nfused

walterz said:

Thanks for the clarification all, it is a DB scheme in question - I had suspected any new SIPP contribution was limited to the salary link but some readings elsewhere had created an element of doubt. 

An awful lot, if not all, DB schemes operate the "net pay" method of contributing so that means your salary will probably not be irrelevant.

It's your taxable earnings, which will be lower, which matter.

xylophone

An awful lot, if not all, DB schemes operate the "net pay" method of contributing so that means your salary will probably not be irrelevant.

Typo? "Relevant" not  "irrelevant"?

Dazed_and_C0nfused

xylophone said:

An awful lot, if not all, DB schemes operate the "net pay" method of contributing so that means your salary will probably not be irrelevant.

Typo? "Relevant" not  "irrelevant"?

😳.  Oops, yes, not very helpful of me!!