SIPP CONTRIBUTIONS AND TREATMENT FOR TAX RETURN

Choudhry

I HAVE CONTRIBUTED IN 2021/22 TO SIPP £105,000 WHICH WAS DEDUCTED FROM MY GROSS SALARY AND WHICH WAS MANAGED BY AN UMBRELLACOMPANY.

MY OTHER INCOME IS £150,000 MAKING TOTAL INCOME OF £255,000. THIS MAKES MY THRESHOLD INCOME OVER £240,000.

QUESTION 1), AM I CORRECT TO ASSUME THAT I AM, BEING A HIGHER EARNER, MY TAPERED ANNUAL ALLOWANCE OF £40,000 WILL BE REDUCED BY £4,000? QUESTION 2) CAN I COVER THE EXCESS CONTRIBUTIONS IN 2021/22 WITH MY UNUSED ALLOWANCES OF £40,000 FROM PREVIOUS TAX YEARS OF 2018/19, 2019/20 AND 2020/21?  PLEASE NOTE I HAD NO PENSION IN PREVIOUS YEARS?

QUESTION 3) PLEASE ADVISE HOW, WHAT AND WHERE THESE FIGURES WILL BE ENTERED IN MY PERSONALTAX RETURN OF2021/22?

dunstonh

For future reference, it is best not to use capitals like that.  On discussion boards, the use of capitals indicates you are shouting or emphasising something unusual.    

1), AM I CORRECT TO ASSUME THAT I AM, BEING A HIGHER EARNER, MY TAPERED ANNUAL ALLOWANCE OF £40,000 WILL BE REDUCED BY £4,000? 

You haven't told us your "adjusted income" or the "threshold income" figures.     You just gave a figure of "over £240,000.  So, tapering will probably begin, but we cannot tell what level of tapering will take place from the lack of information.

QUESTION 2) CAN I COVER THE EXCESS CONTRIBUTIONS IN 2021/22 WITH MY UNUSED ALLOWANCES OF £40,000 FROM PREVIOUS TAX YEARS OF 2018/19, 2019/20 AND 2020/21? 

a) yes you can but remember that the carry forward allowances are also subject to tapering calculations.
b) providing you had a pension in those years, then yes.  However.........

 PLEASE NOTE I HAD NO PENSION IN PREVIOUS YEARS?

In this case, the answer is no.   You must have had a pension held (whether paying into it or not) to be able to use carry forward.

QUESTION 3) PLEASE ADVISE HOW, WHAT AND WHERE THESE FIGURES WILL BE ENTERED IN MY PERSONALTAX RETURN OF2021/22?

Fill in the ‘Pension savings tax charges’ section if online or SA101 if paper.   You tell HMRC the figures.       Do be aware, that HMRC will accept your figures without question initially (in most cases).  However, at a later date, when all data has been received (from not just you but the schemes) their computer auto runs the figures to see if what you declared is correct.   This can be some years down the road.  Often 3+ years.   HMRC can charge penalty interest (and usually do) of upto 100%.   So, get it right first time.

Choudhry

Apologies for using capital letters. Thanks for your information. Please see my reply below to your question:

1) You: You haven't told us your "adjusted income" or the "threshold income" figures. You just gave a figure of "over £240,000.  So, tapering will probably begin, but we cannot tell what level of tapering will take place from the lack of information.

Reply Me: My total income includes Salaries £131,826, rental income £16,597 and dividends £2,010 = £150,433

and total contributions via an Umbrella company to SIPP for 2021/22 £105.789. Therefore total income =£256,222.