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Total pension contributions advice- moving from unemployment to employment
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SuzSunflower
Posts: 3 Newbie
Hello I am a PhD student and have been since 2019. I am not employed by my university, so I earn a stipend not a salary and I don't pay tax. Considering this, I can pay £2880 of my own money into a private pension, plus tax relief, total £3600 each year.
This is something I have been lucky enough to be able to do, but this tax year I made a big mistake and put a lump sum of money I had saved into my SIPP to top it up, forgetting about my pension contribution limit as a non-taxpayer/being unemployed. My SIPP provider has told me I will have to ask for a Refund of excess contributions for this tax year at the start of the next tax year.
In December I am due to go into full time employment and will be auto-enrolled in a workplace pension. I will only be employed in the current tax year for ~4 months and will make just under the salary personal allowance total this tax year, so I still won't pay any tax, or will be able to claim back income tax, for the full current tax year I think.
My question is, how does this change my pension contribution allowance for the tax year if at all? Is it still just total £3600 because I won't be paying tax, and I will have to try and claim back a lot of money as excess contributions/pay tax on the pension contribution? Or would my maximum pension contributions total for the current tax year end up being the total amount of salary I will earn this tax year (just under the personal allowance)?
Hope this makes sense and thanks for any advice.
This is something I have been lucky enough to be able to do, but this tax year I made a big mistake and put a lump sum of money I had saved into my SIPP to top it up, forgetting about my pension contribution limit as a non-taxpayer/being unemployed. My SIPP provider has told me I will have to ask for a Refund of excess contributions for this tax year at the start of the next tax year.
In December I am due to go into full time employment and will be auto-enrolled in a workplace pension. I will only be employed in the current tax year for ~4 months and will make just under the salary personal allowance total this tax year, so I still won't pay any tax, or will be able to claim back income tax, for the full current tax year I think.
My question is, how does this change my pension contribution allowance for the tax year if at all? Is it still just total £3600 because I won't be paying tax, and I will have to try and claim back a lot of money as excess contributions/pay tax on the pension contribution? Or would my maximum pension contributions total for the current tax year end up being the total amount of salary I will earn this tax year (just under the personal allowance)?
Hope this makes sense and thanks for any advice.
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Comments
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Paying tax (or not) is irrelevant.
What do you expect your taxable earnings to be for the current tax year?0 -
My question is, how does this change my pension contribution allowance for the tax year if at all?100% of earnings or £3600, whichever is higher (ignoring maximums as they are irrelevant here)
I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.1 -
When you start work, will you be enrolled immediately into a workplace pension scheme?
If so, will tax relief be given on the "relief at source" or "net pay" basis?
https://www.litrg.org.uk/tax-guides/tax-basics/do-i-have-join-pension-scheme/do-you-know-how-tax-relief-your-pension#:~:text=For net pay schemes: tax,the basic rate of 20%.
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