What's the 2022/23 maximum pension contribution if not earning? 17 March at 12:09PM in Pensions, annuities & retirement planning 9 replies 371 views

DazzerT

I took early retirement from my defined pension years ago. I pay £240 a month into a personal pension. This week I transferred £320 to my pension provider as a lump sum to take my annual amount to £4,000, the new maximum level hailed in a budget a few years ago. The reporting of this week's budget has said this will now rise from £4,000 to £10,000. Unfortunately my pension provider says my maximum is still £3,600 gross. The government's tax website only mentions £4,000. 
Is it really the case that those not earning are still on the lower maximum and will it remain at £3,600 gross even after the latest budget? 

ewaste

It was and continues to be £2,880 Net / £3,600 Gross for non-earners. 

The MPAA was £4,000 and will be Increasing to £10,000. 

DazzerT

Thanks for swift clarification. Pity we're being left behind. 

marlot

If I'm a higher rate taxpayer, can I still contribute £2880, and claim the other 20% back on my tax return?

twiglet98

What is the position during the year of retirement?  I reached age 66 last June and received full State Pension since then, but I was working 18 hours a week until 31 July, so a six week overlap.

I have just received a lump sum (about £20k) from a former work pension and if permitted I thought of putting some into my very tiny HL SIPP.  I only earned £3007 from April to July '22.

molerat

twiglet98 said:

What is the position during the year of retirement?  I reached age 66 last June and received full State Pension since then, but I was working 18 hours a week until 31 July, so a six week overlap.

I have just received a lump sum (about £20k) from a former work pension and if permitted I thought of putting some into my very tiny HL SIPP.  I only earned £3007 from April to July '22.

If you only had £3K earned income for 22-23 then you can only put £3600 gross into a pension including any pension contributions from that employment.

molerat

marlot said:

If I'm a higher rate taxpayer, can I still contribute £2880, and claim the other 20% back on my tax return?

Anyone can pay the £3600 gross into a pension.  If you are a higher rate tax payer you simply declare a £3600 gross pension contribution on your tax return and it pushes your higher rate band starting point further away.

NoMore

marlot said:

If I'm a higher rate taxpayer, can I still contribute £2880, and claim the other 20% back on my tax return?

Are you a higher rate payer solely due to pension income ? Then yes

If you a higher rate tax payer due to other income then your not restricted by the 3600 non earners limit and could put more in depending on your circumstances.

VXman

If you are retired (early) and recieving a teachers pension but also doing some casual work (paying 20%) tax then are you allowed to now contribute £10000 a year to a sipp and get tax relief? If yes, any lower limit on ho much you must earn to be entitled to do this?

molerat

VXman said:

If you are retired (early) and recieving a teachers pension but also doing some casual work (paying 20%) tax then are you allowed to now contribute £10000 a year to a sipp and get tax relief? If yes, any lower limit on ho much you must earn to be entitled to do this?

If you are receiving a teacher's defined benefit pension then the MPAA does not apply to you and you can contribute gross up to your total earned income and not limited to the £4K.  The MPAA, both the old £4k and new £10K only applies if you have taken taxable income from a money purchase pension and limits you to your earned income or the MPAA whichever is lower (or £3600 if your income is below that).