Whats the penalties for going over my Pension Annual Allowance?

vertex

I have DB, DC and SIPP pensions. This makes calculating exact figures regards Annual Allowance difficult/time-consuming.

Im looking to max-out my AA contributions. I dont think I have much carry-forward left.

Im not quite sure of what the consequences are if I go over my AA limit. Am I right in thinking that I wont get a 'punitive charge', its only that HMRC will remove any tax incentive that I would have had otherwise? If so, I can live with that. (Obviously its not ideal, and I will try and limit anything above my AA to as smaller amount as I can).

Thanks

NoMore

Pension Annual Allowance & Charges Explained | M&G Wealth Adviser

Good explanation in link, basically its charge as income tax, but is not classed as income, so allowances and other reliefs don't count.

Dazed_and_C0nfused

And AIUI it's mandatory for this to be resolved via a tax return, even if you don't normally complete one for any other reason.

mark55man

I would agree.  Needs a SA and there are specific questions in the return relating to allowance.  whether MPAA or the normal AA,

vertex

Thanks - that link is helpful and explains in layman's terms.
I do (well, my accountant does) fill in an SA each year. 

Marcon

vertex said:

I have DB, DC and SIPP pensions. This makes calculating exact figures regards Annual Allowance difficult/time-consuming.

Im looking to max-out my AA contributions. I dont think I have much carry-forward left.

Im not quite sure of what the consequences are if I go over my AA limit. Am I right in thinking that I wont get a 'punitive charge', its only that HMRC will remove any tax incentive that I would have had otherwise? If so, I can live with that. (Obviously its not ideal, and I will try and limit anything above my AA to as smaller amount as I can).

Thanks

There could be issues if you pay non-relievable contributions to your SIPP - most won't accept them. Have you looked at the provider's website to see what would happen in your case?

Given you are struggling to do your own calculations (which shouldn't be that difficult once you get to grips with what you're doing, but can seem hopelessly baffling until that state of nirvana has been achieved...), might it be worth paying for some professional advice, not least to ensure you can use any carry forward available?

theblueflash

If you have gone over the tapered annual allowance - investigate if your SIPP or GPP provider offers “scheme pays” option meaning your tax is paid out of “tax-free” income rather than taxed income. You sometimes need to watch scheme deadlines for scheme pays, I know for Fidelity it’s end of August for example.