Carry Forward Specifics

billy2shots

Can anyone shed any light on the following. 

My Wife has become a Ltd company Director this financial year (22/23). 

She has been a member of her LGPS working in education for since tax year 18/19..

I am taking that as fulfilling the 'must be registered in a pension scheme) criteria. 


My query. 

My wife has made the full £40k pension contribution (direct from ltd company) this tax year. 

Can she use carry forward to backfill previous years (3 previous to this one) or not?

I'm confusing myself thinking there might be a different stipulation about needing to have been a director for those precious years. 

Dazed_and_C0nfused

You can never ever "backfill" previous tax years 

Unless you have a TARDIS you can only ever make contributions for the tax year they're paid in.

As she's in LGPS and has separate (employer?) contributions of £40k she is already likely to be way in excess of her current tax years annual allowance

billy2shots

Dazed_and_C0nfused said:

As she's in LGPS and has separate (employer?) contributions of £40k she is already likely to be way in excess of her current tax years annual allowance

Part time TA with a couple of hundred £ pension contribution. 
Leaving mid way through the year (now). 
Contributing £35k this tax year from ltd to stay well within the allowance just in case carry forward can not be used. 

So without being that guy,

Can we stick to my original question. 

Dazed_and_C0nfused

You originally said

My wife has made the full £40k pension contribution (direct from ltd company) this tax year. 

And now say

Contributing £35k this tax year from ltd to stay well within the allowance just in case carry forward can not be used. 


But why couldn't carry forward be used to contribute more in this tax year?  As previously stated you can never "backfill" previous tax years.

And her LGPS contributions are irrelevant for annual allowances purposes.  LGPS is a DB scheme so how much annual allowance she has used in LGPS is based on her Pension Input Amount, a specific calcualtion linked to how the value of her LGPS benefits have increased from one year to the next.

billy2shots

Dazed_and_C0nfused said:

You originally said

My wife has made the full £40k pension contribution (direct from ltd company) this tax year. 

And now say

Contributing £35k this tax year from ltd to stay well within the allowance just in case carry forward can not be used. 


But why couldn't carry forward be used to contribute more in this tax year?  As previously stated you can never "backfill" previous tax years.

And her LGPS contributions are irrelevant for annual allowances purposes.  LGPS is a DB scheme so how much annual allowance she has used in LGPS is based on her Pension Input Amount, a specific calcualtion linked to how the value of her LGPS benefits have increased from one year to the next.

It was written for ease of not having to explain every last variable. 

Which looks like what is happening now. 

Many of the points have been considered and are irrelevant to my question. 

How much she has contributed is largely irrelevant. I just wanted to display I was aware of the £40k allowance. How that is met/breached doesn't effect our issue b

I also raised her LGPS situation to provide people kind enough to help the information that in my opinion she passes the 'enrolled in a pension scheme test'. 

I couldn't care less on the LGPS calculation. With her taxable earnings there is no way she has maxed out which is why so far she has contributed £35k through ltd (because we are aware her employer LGPS contributions are only part of the total pension contribution)




I'll start again 


Question

Wife has become a Ltd company director this tax year. 

She has been enrolled in an LGPS for 4 years. This will stop next week.

Can she use available pension carry forward (after this tax year is full) for her previous 3 years. 

My query is whether or not she needed to be a director for those previous years or not. 

Extra info. We are talking up to £90k in total for this year and previous years so with her remaining allowance for the previous 3 tax years (minus LGPS equation) she has plenty of scope to make the payments without exceeding limits but only if a NEW Director has this ability. 

Dazed_and_C0nfused

billy2shots said:

Dazed_and_C0nfused said:

You originally said

My wife has made the full £40k pension contribution (direct from ltd company) this tax year. 

And now say

Contributing £35k this tax year from ltd to stay well within the allowance just in case carry forward can not be used. 


But why couldn't carry forward be used to contribute more in this tax year?  As previously stated you can never "backfill" previous tax years.

And her LGPS contributions are irrelevant for annual allowances purposes.  LGPS is a DB scheme so how much annual allowance she has used in LGPS is based on her Pension Input Amount, a specific calcualtion linked to how the value of her LGPS benefits have increased from one year to the next.

It was written for ease of having to explain every last variable. 

Which looks like what is happening now. 

How much she has contributed is largely irrelevant. I just wanted to display I was aware of the £40k allowance. 

I also raised her LGPS situation to provide people kind enough to help the information that in my opinion she passes the 'enrolled in a pension scheme test'. 

I couldn't care less on the LGPS calculation. With her taxable earnings there is no way she has maxed out which is why so far she has contributed £35k through ltd (because we are aware her employer LGPS contributions are only part of the total pension contribution. 




I'll start again 


Question

Wife has become a Ltd company director this tax year. 

She has been enrolled in an LGPS for 4 years. This will stop next week.

Can she use available pension carry forward (after this tax year is full) for her previous 3 years. 

My query is whether or not she needed to be a director for those previous years or not. 

Extra info. We are talking up to £90k in total for this year and previous years so with her remains allowance for the previous 3 tax years (minus LGPS equation) she has plenty of scope to make the payment ls without exceeding limits but only if a NEW Director has this ability. 

You have completely lost me.  You are talking about using a lot of (potentially) available unused allowance from previous tax years but aren't interested in the PIA from the LGPS.

How do you know what is available to carry forward without having calculated the PIA from each of the previous three tax years?

https://www.mandg.com/pru/adviser/en-gb/insights-events/insights-library/annual-allowance-carry-forward

And on that note I'll bow out.

Qyburn

My simply view is that she can carry forward unused AA from previous years in order to increase the AA for this year. That doesn't change the limit for her own contributions, that can't exceed her taxable income in this year (which I think includes salary but not dividends, so may depend on how she pays herself).

How has she calculated the PIA for the previous years to decide how much is available to carry forward?

MX5huggy

Every last variable is important.

My LGPS contributions last year approx £2000

PIA was £21000 so only £19000 of AA left.

billy2shots

Dazed_and_C0nfused said:

billy2shots said:

Dazed_and_C0nfused said:

You originally said

My wife has made the full £40k pension contribution (direct from ltd company) this tax year. 

And now say

Contributing £35k this tax year from ltd to stay well within the allowance just in case carry forward can not be used. 


But why couldn't carry forward be used to contribute more in this tax year?  As previously stated you can never "backfill" previous tax years.

And her LGPS contributions are irrelevant for annual allowances purposes.  LGPS is a DB scheme so how much annual allowance she has used in LGPS is based on her Pension Input Amount, a specific calcualtion linked to how the value of her LGPS benefits have increased from one year to the next.

It was written for ease of having to explain every last variable. 

Which looks like what is happening now. 

How much she has contributed is largely irrelevant. I just wanted to display I was aware of the £40k allowance. 

I also raised her LGPS situation to provide people kind enough to help the information that in my opinion she passes the 'enrolled in a pension scheme test'. 

I couldn't care less on the LGPS calculation. With her taxable earnings there is no way she has maxed out which is why so far she has contributed £35k through ltd (because we are aware her employer LGPS contributions are only part of the total pension contribution. 




I'll start again 


Question

Wife has become a Ltd company director this tax year. 

She has been enrolled in an LGPS for 4 years. This will stop next week.

Can she use available pension carry forward (after this tax year is full) for her previous 3 years. 

My query is whether or not she needed to be a director for those previous years or not. 

Extra info. We are talking up to £90k in total for this year and previous years so with her remains allowance for the previous 3 tax years (minus LGPS equation) she has plenty of scope to make the payment ls without exceeding limits but only if a NEW Director has this ability. 

You have completely lost me.  You are talking about using a lot of (potentially) available unused allowance from previous tax years but aren't interested in the PIA from the LGPS.

How do you know what is available to carry forward without having calculated the PIA from each of the previous three tax years?

https://www.mandg.com/pru/adviser/en-gb/insights-events/insights-library/annual-allowance-carry-forward

And on that note I'll bow out.

Let's disregard this year and presume that is full. 

Tax year 21/22 = £40k allowance. LGPS salary £12k

Tax year 20/21 = £40k allowance. LGPS Salary £11K
Tax year 19/20 = £40k allowance. LGPS salary £11k

That's £120k in total allowance and possible carry forward opportunity. 

Now we need to minus any LGPS contributions (employee and scheme additions)

£120k allowance minus the £90k she has available to carry forward leaves £30k.

Are you suggesting that the LGPS works out at £10,000  accrual rate per year on £11k or £12k salary?


That is why I did not include the information. It's not relevant to my question as I know full well that someone earning £12k salary would not have been accruing £10k in pension for that year. 




I do appreciate your time but you are answering questions that haven't been asked. 

Grumpy_chap

The title of this thread:

Carry Forward Specifics

Then the OP gets frustrated at those who know asking for clarity so they can provide the specifics:

billy2shots said:

It was written for ease of not having to explain every last variable. 

Which looks like what is happening now. 

Many of the points have been considered and are irrelevant to my question. 

This is an odd comment:

billy2shots said:

I couldn't care less on the LGPS calculation. 

I don't know the rules for working out the assessed contribution equivalent for final salary schemes, but I do know it can be rather complex and the assessed contribution can be surprisingly high.  Remember, it is the assessment of employer and employee contributions.

billy2shots said:

My query is whether or not she needed to be a director for those previous years or not. 

No, she did not need to be a Director for the 3 previous years carry forward to be utilised.
Anyone has the ability to use carry forward.
There is a limit on contributions of earned income in the year.  This is avoided if making employer contributions from the Ltd Co.

billy2shots

@Grumpy_chap


No, she did not need to be a Director for the 3 previous years carry forward to be utilised.

Anyone has the ability to use carry forward.


That is all you needed to say. No more specifics were needed to get to that answer. 

The rest of your passive aggressive post is irrelevant. 

You must have been replying as I added my answer before yours. 

All those questions are irrelevant. I know the answer and have accounted for them. 
I had one question which you have answered (thank you)  

You and I do not need to know the inner workings of the LGPS calculation because I think we both know that someone earning £12k that year will not have a total LGPS contribution of £10k. It's probably £500.