Carry Forward Specifics

billy2shots

MX5huggy said:

Every last variable is important.

My LGPS contributions last year approx £2000

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

Thank you but trust me. It is not relevant in this thread. 
We are talking total LGPS contribution of somewhere between £250 and £750 a year X 3 years= £750 to £2250.

With carry forward of £120k available and £90k available to use. That leaves £30k of possible LGPS contributions which clearly £750-£2250 does not touch the sides. 




Can't believe we have gone down such a rabbit hole this morning guys. I do genuinely thank you for commenting. 

Grumpy_chap

billy2shots said:

@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.

She also had to be a member of a UK-registered pension scheme during the years for which she wishes to use the carry-forward.

It is my understanding that was satisfied by the LGPS, as I understand it can be any defined contribution or defined benefit scheme that is eligible and there is no need for it to have been the same scheme throughout.

I don't think there is anything to be concerned with here, but you may wish to double check.  The current provider should be able to confirm quickly.  I am as certain as I can be that you are all good on this front, but I've never had a defined contribution pension that is applicable in this context and therefore no reason for me to actually know.

billy2shots

Grumpy_chap said:

billy2shots said:

@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.

She also had to be a member of a UK-registered pension scheme during the years for which she wishes to use the carry-forward.

It is my understanding that was satisfied by the LGPS, as I understand it can be any defined contribution or defined benefit scheme that is eligible and there is no need for it to have been the same scheme throughout.

I don't think there is anything to be concerned with here, but you may wish to double check.  The current provider should be able to confirm quickly.  I am as certain as I can be that you are all good on this front, but I've never had a defined contribution pension that is applicable in this context and therefore no reason for me to actually know.

Thanks. 

It's why I initially mentioned the LGPS (to satisfy that criteria) but was not concerned by the contribution from said scheme due to low earnings). 


There is only one more issue I'm worried about but still to do with my original question. 


Contributing from the ltd company means an annual allowance of £40k. 
Nice and straight forward. However that has only changed this year. 

Can someone use there new allowance (£40k) for carry forward paying into years when the earned less (£12k salary)?



I can't see any reason why not (will check with pension provider and accountant) but I'm interested in gaining knowledge surrounding this before I speak to them. 

Troxy

For DB schemes, the annual allowance used is NOT directly related to contributions made by the employer or employee. The calculation is based on what is called the pension input amount which is often far higher than any contributions made. 

To understand the carry forward available, you will need to understand the pension input amount over the last few years otherwise there will be a tax liability.

Posters have been asking for info on LGPS because it actually is very important to work out the carry forward available 

Dazed_and_C0nfused

Troxy said:

For DB schemes, the annual allowance used is NOT directly related to contributions made by the employer or employee. The calculation is based on what is called the pension input amount which is often far higher than any contributions made. 

To understand the carry forward available, you will need to understand the pension input amount over the last few years otherwise there will be a tax liability.

Posters have been asking for info on LGPS because it actually is very important to work out the carry forward available 

You're getting into specifics there, not what was wanted apparently 😟

billy2shots

Dazed_and_C0nfused said:

Troxy said:

For DB schemes, the annual allowance used is NOT directly related to contributions made by the employer or employee. The calculation is based on what is called the pension input amount which is often far higher than any contributions made. 

To understand the carry forward available, you will need to understand the pension input amount over the last few years otherwise there will be a tax liability.

Posters have been asking for info on LGPS because it actually is very important to work out the carry forward available 

You're getting into specifics there, not what was wanted apparently 😟

And you have reverted back to being passive aggressive. 



Ok then guys. 

You really want to go into the finer detail. I hope you will then reply accepting there is no issue which is what I have been saying from the start. Please do comment. 

Tax year 21/22

Salary £12k. Max contribution rate of 12.5% of pensionable pay to LGPS 

Tax year 20/21 

Salary £11k. Max contribution rate of 12.5% of pensionable pay to LGPS 

Tax year 19/20

Salary £11k. Max contribution rate of 12.5% of pensionable pay to LGPS 


Is anyone in their right mind suggesting over £30,000 has been added to my wife's LGPS  pension over those 3 years. 

It's absolutely bonkers to even question this. Which is why I have said I'm not interested in it. 

If we were interested in using every penny of carry forward then it would be of great interest. We are not. There is £90k (at most) available. Meaning she could have had up to £10k a year accrued in LGPS leaving a £90K allowance which there is no way on this earth she is anywhere near. 

Awaiting comments. 

Grumpy_chap

billy2shots said:

There is only one more issue I'm worried about but still to do with my original question. 

Contributing from the ltd company means an annual allowance of £40k. 
Nice and straight forward. However that has only changed this year. 

Can someone use there new allowance (£40k) for carry forward paying into years when the earned less (£12k salary)?

Assuming you have available carry-forward allowance and were a member of a UK-registered pension scheme (seems to have been confirmed upthread this is the case), then unused allowance from the previous three years can be used.

There is a cap on contributions by the individual at 100% of current year earnings - that is not relevant in the case of employer contributions which is what is being considered here.

The way it works, if contributing above this current year allowance is as follows:

• First use current year allowance £40k, 2022/23
• Then use oldest available carry forward, 2019/20
• Then the next oldest, 2020/21
• The last year, 2021/22

Hope that helps.

Calculating the available carry-forward from years when there was LGPS accrual is not simple and may have used far more of the available allowance than you would ever imagine.

I have tried to keep my answer high-level and avoid specifics, but the rules are very detailed and the specifics can make the difference between eligible and ineligible tax-efficient pension contributions.  You won't be able to avoid the specifics if you get near to limits.

NoMore

billy2shots said:

Tax year 21/22

Salary £12k. Max contribution rate of 12.5% of pensionable pay to LGPS 

Tax year 20/21 

Salary £11k. Max contribution rate of 12.5% of pensionable pay to LGPS 

Tax year 19/20

Salary £11k. Max contribution rate of 12.5% of pensionable pay to LGPS 

The Contribution rate to a DB scheme is nothing to do with the AA, that's what people are trying to explain to you. You may be correct that you have enough AA available but you're just guessing.

As MX5shuggy's example upthread shows DB pensions can use a surprisingly large amount of AA despite low contributions (2000 contributions but 21000 used against the AA).

Thats all people are trying to warn you about, you need to check the PIA of the LGPS for the AA amount not the contributions. As I said you may well have plenty of AA left but you don't know for sure.

billy2shots

Grumpy_chap said:

billy2shots said:

There is only one more issue I'm worried about but still to do with my original question. 

Contributing from the ltd company means an annual allowance of £40k. 
Nice and straight forward. However that has only changed this year. 

Can someone use there new allowance (£40k) for carry forward paying into years when the earned less (£12k salary)?

Assuming you have available carry-forward allowance and were a member of a UK-registered pension scheme (seems to have been confirmed upthread this is the case), then unused allowance from the previous three years can be used.

There is a cap on contributions by the individual at 100% of current year earnings - that is not relevant in the case of employer contributions which is what is being considered here.

The way it works, if contributing above this current year allowance is as follows:

• First use current year allowance £40k, 2022/23
• Then use oldest available carry forward, 2019/20
• Then the next oldest, 2020/21
• The last year, 2021/22

Hope that helps.

Calculating the available carry-forward from years when there was LGPS accrual is not simple and may have used far more of the available allowance than you would ever imagine.

I have tried to keep my answer high-level and avoid specifics, but the rules are very detailed and the specifics can make the difference between eligible and ineligible tax-efficient pension contributions. You won't be able to avoid the specifics if you get near to limits.

I appreciate your effort and I don't want to sound insincere ( it's going to be difficult) however 3/4 of your reply again is irrelevant. 

I know my wife meets the criteria for carry forward due to her enrollment in LGPS - stated in OP

I know the allowances for directors contributing via ltd  having started my own company 21 years ago (and still going). Again, documented during the earlier posts. 

So all irrelevant to my question and red hearings for the echo chamber mse has become. 


'Hope that helps'

No, it was already known as pointed out. 


Calculating the available carry-forward from years when there was LGPS accrual is not simple and may have used far more of the available allowance than you would ever imagine.



so I will ask you a very simple question again. Are you suggesting someone earning £12k a year could have LGPS accrual of £10k for that year?
It's impossible but you don't want to admit that because then the point becomes irrelevant which I have been saying all along. 

I have tried to keep my answer high-level and avoid specifics, but the rules are very detailed and the specifics can make the difference between eligible and ineligible tax-efficient pension contributions. You won't be able to avoid the specifics if you get near to limits.


no, you have tried to skirt around the issue. I have been very clear about my wife's income and therefore likely LGPS accrual. I have also been clear that she will not get near the limits. 




The level of detail we have gone into far outweighs my original question. 

Specifically, can a ltd director use carry forward going back to years before she was a director. 

No more no less. 

I was not asking for her annual allowance as a director - I know that and have experience of that. 

I was not asking for a calculation of her LGPS accrual. The levels she will carry back will not breach carry forward allowance by some margin.


I know OPs can drip feed info into threads but sometimes a straight forward question is exactly that. Strait forward. MSE members either know the answer or they don't. Answering questions not asked confuses the whole thread. 

The number of people turning detective on MSE recently, trying to pick holes in questions or even searching OPs posting history is ever increasing and becoming a less than friendly place these days. 
Fishing for likes from other members seems more important than giving genuine advice or opinion. 

billy2shots

NoMore said:

billy2shots said:

Tax year 21/22

Salary £12k. Max contribution rate of 12.5% of pensionable pay to LGPS 

Tax year 20/21 

Salary £11k. Max contribution rate of 12.5% of pensionable pay to LGPS 

Tax year 19/20

Salary £11k. Max contribution rate of 12.5% of pensionable pay to LGPS 

The Contribution rate to a DB scheme is nothing to do with the AA, that's what people are trying to explain to you. You may be correct that you have enough AA available but you're just guessing.

As MX5shuggy's example upthread shows DB pensions can use a surprisingly large amount of AA despite low contributions (2000 contributions but 21000 used against the AA).

Thats all people are trying to warn you about, you need to check the PIA of the LGPS for the AA amount not the contributions. As I said you may well have plenty of AA left but you don't know for sure.

Thanks for your input but I am certain there is enough allowance left. 

The LGPS scheme pays in at 12.5% of pensionable pay. My wife has earned £34,000 over the past 3 tax years (e.g before this tax year). 

There is no way £34,000 salary will contribute £30,000 LGPS accrual over that period. That £30,000 is the safety net that we won't exceed. I am very comfortable with that thinking unless someone tells me the LGPS workings give like for like salary and pension accrual (ie £12k salary =£12k pension accrual). 
If they did that I would work for an LGPS employer myself lol.