Pension tapering rule and unused allowance help?

a03b

Hi All, I did a lot of research on the topic but still can't figure out exactly how this "tapering" works. Below some details

2022-23 tax year:
Threshold income 224,000
Adjusted income 232,000
Paid into pension 8,000

2023-24 tax year:
Threshold income 210,000
Adjusted income 229,000
Paid into pension 19,000

2024-25 tax year: obviously not over yet but estimates below (it was a good year)
Threshold income 320,000
Adjusted income 343,000
Paid into pension 23,000

So my question is what is my unused allowance? And how much can I pay into my pension pot in 2025-26 tax year?

I think:

From 22-23 I have 32,000
From 23-24 I have 41,000
From 24-25 I'm over the limit by 13,000

Total unused allowance: 60,000 but I may be COMPLETELY WRONG

Thanks!

Sam_666

Dead simple. 60,000-23,000 = 37,000 (unused allowance)
Your previous years have no relevance.

"From 24-25 I'm over the limit by 13,000".
Over what limit?

TheSpectator

Sam_666 said:

"From 24-25 I'm over the limit by 13,000".
Over what limit?

This? https://www.gov.uk/guidance/pension-schemes-work-out-your-tapered-annual-allowance

DRS1

The sums look right to me but have you worked out the income figures correctly?  Are there any employer contributions?

This might do better on the Pensions Board or the Cutting Tax board.

a03b

Sam_666 said:

Dead simple. 60,000-23,000 = 37,000 (unused allowance)
Your previous years have no relevance.

"From 24-25 I'm over the limit by 13,000".
Over what limit?

No that's the whole point of tapering. I don't have the max 60k allowance sadly

Secret2ndAccount

For 24/25 the Adjusted Income limit is 260,000. You are over by 83,000 so you lose half of that: 41,500, leaving an AA of 18,500. So you are over by 4,500. But that comes out of your 21/22 AA if you have any left. What happened in 21/22?

If you fully exploited your AA in 21/22, then the 4,500 comes out of the 32,000 (22/23) So in 25/26 you will have:
27,500 + 41,000 + 0 + (25/26 tapered AA)

If you had enough spare AA in 21/22 then the 4,500 will use that, and your 25/26 limit will be
32,000 + 41,000 + 0 + (25/26 tapered AA)

Remember, that's the total of all contributions - you, your employer, and the taxman
The minimum your AA can taper to is 10,000, so the minimum your total for 25/26 could be is 78,500. If you earn 260k, then your allowance could be up to 133k

There are people on this board who earn 40k and pay more into their pension than you do. Are you not keen to retire? Better have a good alternative use for the money, or use up that AA next year and the year after.

a03b

Secret2ndAccount said:

For 24/25 the Adjusted Income limit is 260,000. You are over by 83,000 so you lose half of that: 41,500, leaving an AA of 18,500. So you are over by 4,500. But that comes out of your 21/22 AA if you have any left. What happened in 21/22?

If you fully exploited your AA in 21/22, then the 4,500 comes out of the 32,000 (22/23) So in 25/26 you will have:
27,500 + 41,000 + 0 + (25/26 tapered AA)

If you had enough spare AA in 21/22 then the 4,500 will use that, and your 25/26 limit will be
32,000 + 41,000 + 0 + (25/26 tapered AA)

Remember, that's the total of all contributions - you, your employer, and the taxman
The minimum your AA can taper to is 10,000, so the minimum your total for 25/26 could be is 78,500. If you earn 260k, then your allowance could be up to 133k

There are people on this board who earn 40k and pay more into their pension than you do. Are you not keen to retire? Better have a good alternative use for the money, or use up that AA next year and the year after.

This is ABSOLUTELY GOLD! Many thanks for this.

I am fully aware I am underpaying by a mile. My circumstances are a bit odd though. I moved to the UK in 2022 hence no pension in 21-22 and I was simply not aware of my allowances back then. Otherwise I would have maxed out.

Once again thanks very very much for the above.