Maximum pension contribution for past years

Dazed_and_C0nfused

 I also have an adjustment to my tax code for the 40% relief.

Remember you only factor in the basic rate tax relief added by the SIPP provider when adding up things for annual allowance purposes.

Any personal income tax saving isn't counted.

zagfles

handful said:

zagfles said:

handful said:

Ok thanks for all of the advice so far. So I now understand where I was going wrong but have a further question. Can I top up to the £60k limit that I am going to earn this year and specify that the top up is for one of the previous years unused allowances leaving this year to be topped up next year assuming I carry on working in the same job on the same salary?

No. This year's contributions will use this year's AA first. If your total PIA is over £60k including employer/workplace contributions then it'll use up any available carry forwards starting with the oldest available ie 3 years ago (assuming you were in a pension scheme then).

You need to understand how workplace pension contributions are taken before you can work out the max you can contribute to a SIPP. Don't even think about maxing out contributions until you're sure you understand. For instance, sal sac/net pay contributions will reduce taxable earnings, RAS contributions won't and so the grossed up amount would need to be deducted from your taxable earnings. How are your contributions taken?

Thanks zagfles, I haven't got he money yet but trying to prepare for when I do!

I pay a small amount into a company pension with Peoples Pension (not sal sac) and my employer also pay into that, total of employer and employee of around £3.5k and I then pay £560pm into a SIPP which is grossed up to £700 so £8.4k per year into that. I also have an adjustment to my tax code for the 40% relief.

So assuming your workplace contributions are RAS as Marcon said above, then for the tax relief limit, you'd need to make sure your gross contributions (inc the tax relief added - ie the net divided by 0.8) to the workplace scheme plus the SIPP don't exceed your taxable earnings. Remember no carry forwards on this. Ignore employer conts for the tax relief limit.

For the annual allowance you need to include gross contribitions to the SIPP and workplace plus employer conts. But you can use carry forwards for the AA.

handful

zagfles said:

handful said:

zagfles said:

handful said:

Ok thanks for all of the advice so far. So I now understand where I was going wrong but have a further question. Can I top up to the £60k limit that I am going to earn this year and specify that the top up is for one of the previous years unused allowances leaving this year to be topped up next year assuming I carry on working in the same job on the same salary?

No. This year's contributions will use this year's AA first. If your total PIA is over £60k including employer/workplace contributions then it'll use up any available carry forwards starting with the oldest available ie 3 years ago (assuming you were in a pension scheme then).

You need to understand how workplace pension contributions are taken before you can work out the max you can contribute to a SIPP. Don't even think about maxing out contributions until you're sure you understand. For instance, sal sac/net pay contributions will reduce taxable earnings, RAS contributions won't and so the grossed up amount would need to be deducted from your taxable earnings. How are your contributions taken?

Thanks zagfles, I haven't got he money yet but trying to prepare for when I do!

I pay a small amount into a company pension with Peoples Pension (not sal sac) and my employer also pay into that, total of employer and employee of around £3.5k and I then pay £560pm into a SIPP which is grossed up to £700 so £8.4k per year into that. I also have an adjustment to my tax code for the 40% relief.

So assuming your workplace contributions are RAS as Marcon said above, then for the tax relief limit, you'd need to make sure your gross contributions (inc the tax relief added - ie the net divided by 0.8) to the workplace scheme plus the SIPP don't exceed your taxable earnings. Remember no carry forwards on this. Ignore employer conts for the tax relief limit.

For the annual allowance you need to include gross contribitions to the SIPP and workplace plus employer conts. But you can use carry forwards for the AA.

Thank you for the explanation, much appreciated.