SIPP annual allowances

What_time_is_it

Dazed_and_C0nfused said:

What_time_is_it said:

Thanks everyone.
I'm taking redundancy at the end of December and I won't be working in the 2025/26 tax year so it looks like the maximum I can put in a SIPP would be £2,880 then.
Would you advise that I set up a SIPP during this tax year (i.e. before end of March 2025) in order to use up previous years "unused" annual allowance?

How much do you expect to earn in the current tax year?

Are you in a defined benefit scheme?

I'm a "hybrid" scheme. Some of it is DB, some of it is DC. I salary sacrifice into both elements, so my salary is just above NMW. I expect to earn (after sal sac) around £12-£15k in the 2024/25 tax year. But I've have contributed around £20-£25k via sal sac into the DC pot, plus the DB part.

Dazed_and_C0nfused

What_time_is_it said:

Dazed_and_C0nfused said:

What_time_is_it said:

Thanks everyone.
I'm taking redundancy at the end of December and I won't be working in the 2025/26 tax year so it looks like the maximum I can put in a SIPP would be £2,880 then.
Would you advise that I set up a SIPP during this tax year (i.e. before end of March 2025) in order to use up previous years "unused" annual allowance?

How much do you expect to earn in the current tax year?

Are you in a defined benefit scheme?

I'm a "hybrid" scheme. Some of it is DB, some of it is DC. I salary sacrifice into both elements, so my salary is just above NMW. I expect to earn (after sal sac) around £12-£15k in the 2024/25 tax year. But I've have contributed around £20-£25k via sal sac into the DC pot, plus the DB part.

Then you almost certainly cannot use unused annual allowance.

You have to have used this years £60k before you can use anything from earlier years.

What_time_is_it

But if I use the rest of my annual allowance for this year by opening up a SIPP? 
Could I then use previous unused AA?

Dazed_and_C0nfused

What_time_is_it said:

But if I use the rest of my annual allowance for this year by opening up a SIPP? 
Could I then use previous unused AA?

How could you do that if your earnings are only £12-15k.

Do you know your expected PIA value for the DB element?

If you add that to £15k and then the employer contributions of £25k+ will you have actually even reached £60k in the current tax year?

What_time_is_it

Dazed_and_C0nfused said:

What_time_is_it said:

But if I use the rest of my annual allowance for this year by opening up a SIPP? 
Could I then use previous unused AA?

How could you do that if your earnings are only £12-15k.

Do you know your expected PIA value for the DB element?

If you add that to £15k and then the employer contributions of £25k+ will you have actually even reached £60k in the current tax year?

I'll have a redundancy payment when I leave my job at the end of the year. Could I pay some of that into a SIPP during January-March?

I'm not sure what you mean by "£15k plus employer contributions of £25k+"? By the end of December I will have sal sacced about £20-£25k (employer contribution? Not sure) into my DC pot. There is no additional employer contribution. Then there is a DB element which I've paid in 6.1% and my employer has paid in 14.5%. I don't think I get close to the £60k limit. But if I open a new SIPP and pay in my redundancy money I certainly would. In all liklihood I would exceed £60k. I also have some additional savings which I may invest in a SIPP if that is an option (i.e. If I can use previous years unused AA)

Dazed_and_C0nfused

What_time_is_it said:

Dazed_and_C0nfused said:

What_time_is_it said:

But if I use the rest of my annual allowance for this year by opening up a SIPP? 
Could I then use previous unused AA?

How could you do that if your earnings are only £12-15k.

Do you know your expected PIA value for the DB element?

If you add that to £15k and then the employer contributions of £25k+ will you have actually even reached £60k in the current tax year?

I'll have a redundancy payment when I leave my job at the end of the year. Could I pay some of that into a SIPP during January-March?

I'm not sure what you mean by "£15k plus employer contributions of £25k+"? By the end of December I will have sal sacced about £20-£25k (employer contribution? Not sure) into my DC pot. There is no additional employer contribution. Then there is a DB element which I've paid in 6.1% and my employer has paid in 14.5%. I don't think I get close to the £60k limit. But if I open a new SIPP and pay in my redundancy money I certainly would. In all liklihood I would exceed £60k. I also have some additional savings which I may invest in a SIPP if that is an option (i.e. If I can use previous years unused AA)

I think you are missing the fundamental point that you cannot use carry forward until you have used the current year's annual allowance, which is £60k.

Salary sacrifice means you are agreeing to give up some salary in return for employer contributions, that's why no pension tax relief is added to your pension fund.

Contributions to a DB pension are irrelevant, you need the pension input amount for annual allowance purposes.  

timrowlands

You will only be able to put your taxable earnings after salary sacrifice into a SIPP, even if you have paid little to no tax. In relation to your redundancy payment, only the taxable element over the first £30,000 can go into your SIPP. Carry forward will only apply if your combined pension contributions and pension input amount for DB exceed £60,000. Pension input amount isn’t the amount you pay in, it is the increase in benefits over the year, multiplied by 16, with a downward adjustment to account for inflation.

What_time_is_it

Thanks for the info guys.
I think I need to go back to the drawing board on this as I am getting very confused and have clearly muddled some things up!
I might post a separate query in the Pensions forum here, outlining my exact circumstances. 
Thanks again.