Do I need Financial Advice before liquidating inherited portfolio?

wjr4

Are you planning to continue working? If so, you can earmark some of the money to make pension contributions in the future. 

David7823

wjr4 said:

Are you planning to continue working? If so, you can earmark some of the money to make pension contributions in the future. 

Yes, will work for the forseeable....so I think the penny is dropping, I earn 65K, my regular pension contribution for this year is 20K. I can add another 20K to use up this years allowance of 40K. I have an unused allowance of 20K from three years ago I could use, which would take me up to 60K contribution this year. I could then use 5K of my unused allowance from 2 years ago which would give me a maximum 65k contribution this year.

I could put the remainder of inheritance into an ISA and use it after April next year to put another 65K into pension.

Hopefully I have finally understood it. 

Grumpy_chap

Bimbly said:

David7823 said:

I had read on the Government site that I could carry over unused Annual Allowance for up to  years. 

But reading your message, I now understand that, yes I can backfill for the previous 3 years, but will only get the 20% tax uplift for the current year?

Not quite, if I am understanding you correctly.

You cannot put more into a pension than your salary in any tax year, regardless of the annual allowance.

If you earn 40k this year and have put 20k into your pension, then you can add another 20k to take you up to your full salary.

However, if you earn 50k this year and you only put 20k into your pension both this year and last year (didn't use the full announce - an unused allowance of 40k), you can add an extra 30k into your pension this year (20k already added plus 30k extra), which is your whole salary. You cannot add more than 50k because that is your salary.

Btw, these totals include any contributions made by your employer, so if your employer adds some money in on top, that has to be accounted for in your allowances.

That's not strictly the case in the context of the annual earnings cap, only the Annual Allowance (and Carry-Forward).

As an example:
If an individual earned £65k, it would be possible to salary sacrifice (if available) to £25k and have the £40k contributed to pension as employer contributions.  In this case, contribution exceeds earnings.  The annual allowance (and carry-forward) limits still apply.

Brie

Have you checked if there are any financial advisors available via work?  Maybe someone working for one of the 2 DC schemes??  Also most IFAs will do a 1 hour free session so they can see if they want your business and you can see if they are someone you can get along with as well.  These sessions can be very useful especially if you go in prepared with specific questions.

AlanP_2

For salary limit the only thing that counts is YOUR gross contribution (incl any tax relief claimed by your provider)

For AA limit it is ALL contributions so includes employer's.

MallyGirl

David7823 said:

wjr4 said:

Are you planning to continue working? If so, you can earmark some of the money to make pension contributions in the future. 

Yes, will work for the forseeable....so I think the penny is dropping, I earn 65K, my regular pension contribution for this year is 20K. I can add another 20K to use up this years allowance of 40K. I have an unused allowance of 20K from three years ago I could use, which would take me up to 60K contribution this year. I could then use 5K of my unused allowance from 2 years ago which would give me a maximum 65k contribution this year.

I could put the remainder of inheritance into an ISA and use it after April next year to put another 65K into pension.

Hopefully I have finally understood it. 

ISA limit is £20k per tax year