Can I get a tax refund on last year's self assessment by contributing to a pension this year?

miffyhugmuffin

Hello,
I've been self employed for a few years, during which time I wasn't earning enough to pay into a pension.   I now have a PAYE job as well as the self employed work I do and I would like to make some additional pension contributions.  Can I make retrospective pension contributions for the years I was self employed only?  Do these effect the tax I have already paid (if they bring me under the personal allowance would I get the tax I paid back)?
Thanks, M. 

DRS1

No you can't

Dazed_and_C0nfused

miffyhugmuffin said:

Hello,
I've been self employed for a few years, during which time I wasn't earning enough to pay into a pension.   I now have a PAYE job as well as the self employed work I do and I would like to make some additional pension contributions.  Can I make retrospective pension contributions for the years I was self employed only?  Do these effect the tax I have already paid (if they bring me under the personal allowance would I get the tax I paid back)?
Thanks, M. 

Even if you had no profits you could have paid £2,880 each tax year and received £720 in basic rate relief, giving you £3,600 in your pension fund even if you weren't paying any tax.

You can never make pension contributions for a tax year that has ended but it seems you have misunderstood how pension contributions you make work.

Contributions you make to a personal pension or SIPP don't reduce your taxable income, that remains the same.  But you get basic rate tax relief added to the amount you contribute (within certain limits).  So £100 from you becomes £125 in the pension.

Is there any reason why making extra contributions in the current tax year won't be just as beneficial 🤔.  What sort of amounts were you thinking of paying?

NB.  It can work differently with contributions to an employers scheme.

miffyhugmuffin

Thanks both for replying.
I'm in the LGPS now.  Earning about £52k gross annual salary PAYE. I pay the standard pension contribution into LGPS at the moment.  I have about £10k per year self employed income.  I'm thinking of contributing £10k a year extra into LGPS to avoid 40% tax.  I don't have much saved in a pension, so need to start getting serious about it!

I find the combination of PAYE and self assessment a bit confusing regarding pensions as it's the first year I've had to think about both.  

Dazed_and_C0nfused

miffyhugmuffin said:

Thanks both for replying.
I'm in the LGPS now.  Earning about £52k gross annual salary PAYE. I pay the standard pension contribution into LGPS at the moment.  I have about £10k per year self employed income.  I'm thinking of contributing £10k a year extra into LGPS to avoid 40% tax.  I don't have much saved in a pension, so need to start getting serious about it!

I find the combination of PAYE and self assessment a bit confusing regarding pensions as it's the first year I've had to think about both.  

If you prefer to keep things simple then paying that £10k via payroll on a monthly basis will be a good option.

As LGPS is a DB pension (like deferred salary, not a pot of money) there are a few options for extra contributions.

https://www.lgpsmember.org/your-pension/paying-in/paying-more/

The advantage with paying via payroll is you don't have to involve HMRC or enter anything about the contributions on your tax return, they will reduce your taxable earnings and this will be reflected on your P60.