Accidentally exceeded earnings limit through SIPP contribution

masonic

Due to a combination of factors, I estimate my earnings for this year aren't going to be sufficient to qualify for tax relief on all of my pension contributions. I have a workplace scheme with contributions via salary sacrifice, and also a SIPP where I made a lump sum contribution that I thought was going to be covered by earnings, but I now estimate will be about £6k over. I have plenty of annual allowance carry forward to cover this, so the only limitation is my earnings this year. Based on PTM045000, I believe I may be able to get the excess repaid to me, although the language is "may", so I don't know if this is at the pension scheme's discretion. If I were able to do that then I would be looking to re-contribute it in the following tax year where it will easily be covered by earnings. The exact position is uncertain at the moment, so I don't think I can approach them until after the end of the tax year when I have exact figures. Elsewhere I've read things about declaring the excess on my tax return, but that seems to be around exceeding the annual allowance, which I have not done, and of course this is a less attractive option anyway as it would result in contributions without tax relief. I'd be interested in hearing opinions on the best way forward.

Marcon

masonic said:

Due to a combination of factors, I estimate my earnings for this year aren't going to be sufficient to qualify for tax relief on all of my pension contributions. I have a workplace scheme with contributions via salary sacrifice, and also a SIPP where I made a lump sum contribution that I thought was going to be covered by earnings, but I now estimate will be about £6k over. I have plenty of annual allowance carry forward to cover this, so the only limitation is my earnings this year. Based on PTM045000, I believe I may be able to get the excess repaid to me, although the language is "may", so I don't know if this is at the pension scheme's discretion. If I were able to do that then I would be looking to re-contribute it in the following tax year where it will easily be covered by earnings. The exact position is uncertain at the moment, so I don't think I can approach them until after the end of the tax year when I have exact figures. Elsewhere I've read things about declaring the excess on my tax return, but that seems to be around exceeding the annual allowance, which I have not done, and of course this is a less attractive option anyway as it would result in contributions without tax relief. I'd be interested in hearing opinions on the best way forward.

See https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm045000#Refundecls

Scroll down to 

Refund of excess contributions lump sum

masonic

Thanks, yes that is the link I found and quoted in my opening post, so if it is as simple as that and my SIPP provider (Fidelity) will (rather than may) return the excess less the tax relief to me then happy days.

I suppose in my situation where all other pension contributions were salary sacrifice / employer, the relevant figures to use (when I have them) would be my P60 total pay for the year plus relevant cash values on my P11D? Do employer contributions to my workplace pension need to be added to my own gross contributions to my SIPP (I am currently assuming that they do)? My own salary sacrificed contributions are obviously covered by income not included in my P60 so can be ignored for the purposes of this calculation, but I don't know how matched contributions from my employer are treated.

Edit: If I'm reading this section correctly regarding employer contributions, it looks like I don't need to count these towards my limit for tax relief.

NoMore

You don't get tax relief on employer or salary sacrifice contributions, so they don't count against the Tax relief limit.