Tax Top Ups on Pension Contributions When Not Working

I'm no longer employed and my pension plans are now a little out of sync.

I used to use salary sacrifice to boost my pension, using previous years carry forward allowances and, if I've done my sums correctly, I have £10k unused allowance from 20/21 which I gather will expire in April if not utilised.

I'm a higher rate taxpayer and I have some points I'd like to double check. Am I correct in saying that:

1) If I move £8k from my savings to my pension, the pension platform (HL) will automatically add £2k?

2) The additional tax relief should be claimed by my 23/24 self assessment and will be paid as a refund to the tax paid in 23/24 (as opposed to an increased allowance for 24/25, or being added directly to the pension)?


Also, assuming 1) is correct, are there any deadlines to worry about? For example if I paid £8k on April 1st and the relief wasn't added until April 7th, would £10k still count as a 20/21 contribution or would it be split across 20/21 (£8k) and 21/22 (£2k)?

Thanks in advance

Comments

  • BoGoF
    BoGoF Posts: 6,784
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    When you say no longer employed - I assume you have been employed in the current 23/24 tax year (hence why you are a HR taxpayer).

    1) Correct
    2) Correct - normally both would happen on the basis HMRC assumes you will do same in 24/25 and adjust your tax code but if you are no longer in employment.

    However before you can use carry forward amounts you need to utilise all the current years annual allowance so unless you are contributing more than £60,000 you will lose the £8k available to c/f


  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 12,783
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    I'm no longer employed and my pension plans are now a little out of sync.

    I used to use salary sacrifice to boost my pension, using previous years carry forward allowances and, if I've done my sums correctly, I have £10k unused allowance from 20/21 which I gather will expire in April if not utilised.

    I'm a higher rate taxpayer and I have some points I'd like to double check. Am I correct in saying that:

    1) If I move £8k from my savings to my pension, the pension platform (HL) will automatically add £2k?

    2) The additional tax relief should be claimed by my 23/24 self assessment and will be paid as a refund to the tax paid in 23/24 (as opposed to an increased allowance for 24/25, or being added directly to the pension)?


    Also, assuming 1) is correct, are there any deadlines to worry about? For example if I paid £8k on April 1st and the relief wasn't added until April 7th, would £10k still count as a 20/21 contribution or would it be split across 20/21 (£8k) and 21/22 (£2k)?

    Thanks in advance
    None of it would count as a 20/21 contribution.

    You can only ever contribute for the current tax year.  All carry forward does, if available, is allow a larger contribution in the current tax year.
  • Ferro
    Ferro Posts: 117
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    edited 7 February at 12:57PM
    Have you sufficient earnings upon which to pay personal pension contributions above £3600 (grossed up) in 2023/24? 

    You say that you are a higher rate taxpayer but are a
    no longer employed which suggests that you have no qualifying earnings. 

    I note BoGof comments in his/her first paragraph.
  • Albermarle
    Albermarle Posts: 21,160
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    1) If I move £8k from my savings to my pension, the pension platform (HL) will automatically add £2k?

    Yes they will regardless of whether you are entitled to the tax relief or not. It is your responsibility not to get more tax relief than you are entitled to.

    It is not yet clear what you are entitled to, until you answer the previous questions.

  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 12,783
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    edited 7 February at 1:31PM
    In December 2023 op posted about changing jobs so quite possibly has plenty of earnings in the current tax year but no doubt they will clarify things idc.
  • DoctorStrange
    DoctorStrange Posts: 378
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    Thanks for the replies, always appreciated!  And my apologies for the lack of detail.

    My taxable income this tax year, after salary sacrifice, was around £75k. As D&C noted, I was to start a new role in January but that fell through so I can't hit my contribution target for this year. I have contributed more than £60k this year so I'm able to use the carry forward but, as I'm doubtful I'll work again this tax year, I think I'll wind up losing it so was just wondering about my options.

    @Dazed_and_C0nfused
    Thanks for the correction re the 20/21 contribution, and my apologies for the incorrect description. What I'm trying to understand in that scenario is whether the £2k would come out of the 20/21 carry forward allowance, or if I'd only utilise £8k of the £10k I've got, and the £2k would come out of the 21/22 carry forward instead if added by HL after 6th April.
  • BoGoF
    BoGoF Posts: 6,784
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    The deemed date of the gross equivalent (including tax relief) will be the date you actually make the net payment. It does not matter when the tax relief is added which may be some weeks later.
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