Junior SIPP

MortagageWannabe

Good afternoon

I have a query regarding backdating contributions for my child's Junior SIPP, which was opened on February 1st, 2024, with no contributions made 

Can I backdate contributions for the following tax years: 

2023/2024 (£2880), 

2024/2025 (£2880), and 

2025/2026 (£2880).

My understanding is that scheme membership is required for backdating. However, I’m not certain whether contributions are also necessary to be eligible?

I have  3 years expenses with of emergency fund in premium bonds and fill our ISA/JISA (£20k and £9k) every year. I max out my pension contributions through salary sacrifice as well.

Thank you.

MW

TheSpectator

Nope, there is no such thing as backdating. There is carry forward but it's not apllicable in this scenariio.

Albermarle

You can add £2880 for this tax year only. 

Marcon

MortagageWannabe said:

Good afternoon

I have a query regarding backdating contributions for my child's Junior SIPP, which was opened on February 1st, 2024, with no contributions made 

Can I backdate contributions for the following tax years: 

2023/2024 (£2880), 

2024/2025 (£2880), and 

2025/2026 (£2880).

My understanding is that scheme membership is required for backdating. However, I’m not certain whether contributions are also necessary to be eligible?

I have  3 years expenses with of emergency fund in premium bonds and fill our ISA/JISA (£20k and £9k) every year. I max out my pension contributions through salary sacrifice as well.

Thank you.

MW

Contributions aren't necessary - just that the individual concerned was a member of a registered pension scheme for the tax years in which carry forward (which actually means backdating to normal people!) is to be used.

The snag here is that the maximum a non-earner can contribute in any tax year is £3,600 gross (ie £2,880 paid in, with the provider adding basic rate tax relief to the 'pot', even if no tax has been paid by the member). So the answer is no, I'm afraid. You can only pay in £2,880 each tax year until the child starts earning enough...

MortagageWannabe

Thank you @TheSpectator @albemarle @Marcon for the responses.

Is my understanding of HMRC guidance that I can contribute £2,800 x3 wrong? 

“if the individual was a member of a registered pension scheme at any time during a previous tax year but did not have a pension input amount for that particular tax year, they can carry forward the full amount of the annual allowance from that year.”

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm055100#carryforwardprevious 

TheSpectator

MortagageWannabe said:

Thank you @TheSpectator @albemarle @Marcon for the responses.

Is my understanding of HMRC guidance that I can contribute £2,800 x3 wrong? 

“if the individual was a member of a registered pension scheme at any time during a previous tax year but did not have a pension input amount for that particular tax year, they can carry forward the full amount of the annual allowance from that year.”

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm055100#carryforwardprevious 

Yes, your understanding is wrong. Carry forward of annual allowance just does not apply to non-earners and is only relevant when you have  earnings over the annual allowance and you want to contribute more than the annual allowance by using carry forward.

NoMore

Technically you could carry forward if they have been a member of a recognised pension scheme in the preceding years, but there is little point as you won't get Tax relief on anything above the initial £2880.

There are two different limits in play, the Annual Allowance (AA), which you can extend by unused from previous 3 years and the Tax relief limit which limits the amount of tax relief you can claim to your relevant uk earnings or £2880 (£3600 Gross) if not enough relevant earnings.

HappyHarry

MortagageWannabe said:

Thank you @TheSpectator @albemarle @Marcon for the responses.

Is my understanding of HMRC guidance that I can contribute £2,800 x3 wrong? 

“if the individual was a member of a registered pension scheme at any time during a previous tax year but did not have a pension input amount for that particular tax year, they can carry forward the full amount of the annual allowance from that year.”

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm055100#carryforwardprevious 

You need to read the very first paragraph of the link you have quoted, and bear in mind that the annual allowance is currently £60,000:

The carry forward rule - general

From tax year 2011-12 onwards, if an individual has a total pension input amount of more than the annual allowance, they may still not be liable for an annual allowance charge for that year due to carrying forward available unused annual allowance. 

Albermarle

MortagageWannabe said:

Thank you @TheSpectator @albemarle @Marcon for the responses.

Is my understanding of HMRC guidance that I can contribute £2,800 x3 wrong? 

“if the individual was a member of a registered pension scheme at any time during a previous tax year but did not have a pension input amount for that particular tax year, they can carry forward the full amount of the annual allowance from that year.”

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm055100#carryforwardprevious 

It is a very common misunderstanding that we see very often in the forum.
There is a max amount you can add in total to a pension each year ( currently £60k). If you do not use it all you can carry the unused part of this annual allowance.forward.
However separately there are rules about much you can add and get tax relief each year. There is no carry forward associated with this, so you are restricted to the £2880 and the possibility of carrying forward unused annual allowance is not relevant.

Marcon

The original question was clearly asking about tax-relievable contributions, so we've all answered on that basis. Technically there is no limit to the amount you can add, but the two issues which follow are (a) lack of tax relief and (b) the pension provider may have a requirement that only tax-relievable contributions can be made - so doing anything other than that can give rise to problems.

MortagageWannabe

Thank you for the further responses. This has helped clarify things (somewhat).

Can I therefore contribute £2,880 x2 for 2023/24 and 2024/25 tax years with no expectation of receiving tax relief and £2880 for 2024/2025 which will attract £720 tax relief?

AJ Bell JSIPP T&Cs only mention a maximum of £3,600 per year

https://www.ajbell.co.uk/pensions/junior-sipp