Carry Forward sanity check

Lowtrawler

I want to check how much I can top up my pension this year via personal contributions.

I am paid through an Umbrella company and expect at the end of this financial year to have Gross Pay of £65k and for £58k of employer contributions to have been paid into my SIPP by the Umbrella.

I have £50k of carry forward allowance from 2022/23 and 2023/24.

Question: Am I restricted to £7k Gross, £5.6k Net, personal contributions using up £5k of my carried forward allowance from 2022/23, or; am I able to pay more? If so, how much more?

Secret2ndAccount

Basically that is correct.  Your salary is only 7k, so you can only get tax relief on contributions of 5.6k->7k. Any more would not be eligible for tax relief so they would be worse than pointless, though not illegal.
Yes, that's a total from all sources of 65k, so you use up 5k of CF from the oldest year in which it is available, typically three years ago

Lowtrawler

Secret2ndAccount said:

Basically that is correct.  Your salary is only 7k, so you can only get tax relief on contributions of 5.6k->7k. Any more would not be eligible for tax relief so they would be worse than pointless, though not illegal.
Yes, that's a total from all sources of 65k, so you use up 5k of CF from the oldest year in which it is available, typically three years ago

My Gross salary is £65k as the £58k is via salary sacrifice i.e. the Gross would have been £123k. Does this change your answer?

NoMore

Lowtrawler said:

Secret2ndAccount said:

Basically that is correct.  Your salary is only 7k, so you can only get tax relief on contributions of 5.6k->7k. Any more would not be eligible for tax relief so they would be worse than pointless, though not illegal.
Yes, that's a total from all sources of 65k, so you use up 5k of CF from the oldest year in which it is available, typically three years ago

My Gross salary is £65k as the £58k is via salary sacrifice i.e. the Gross would have been £123k. Does this change your answer?

Yes it does, if you have 63k of carry forward available you can put all your salary (gross) into your Pension. Possibly most tax efficient to increase your Salary sacrifice to minimum wage then make the rest of the contribution via relief at source, that would be 80% of the remaining to your pension, with the Pension claiming the rest as basic rate tax relief.

EDIT: Didn't see your statement of 50k carry forward so reduce the amounts for that.

Marcon

If you have £50K of carry forward + this tax year's annual allowance of £60K, there is scope for tax efficient contributions of £110K in total. Take off the employer contribution of £58K (which is of course gross) and the remaining £52K is well within your salary, so you can make a gross personal contribution of up to £52K (ie you pay up to £41.6K and the SIPP provider adds basic rate relief).

Lowtrawler

NoMore said:

Lowtrawler said:

Secret2ndAccount said:

Basically that is correct.  Your salary is only 7k, so you can only get tax relief on contributions of 5.6k->7k. Any more would not be eligible for tax relief so they would be worse than pointless, though not illegal.
Yes, that's a total from all sources of 65k, so you use up 5k of CF from the oldest year in which it is available, typically three years ago

My Gross salary is £65k as the £58k is via salary sacrifice i.e. the Gross would have been £123k. Does this change your answer?

Yes it does, if you have 63k of carry forward available you can put all your salary (gross) into your Pension. Possibly most tax efficient to increase your Salary sacrifice to minimum wage then make the rest of the contribution via relief at source, that would be 80% of the remaining to your pension, with the Pension claiming the rest as basic rate tax relief.

Thanks, so with £50k of carry forward available, I could pay in £52k Gross, £41.6k net? I don't have that level of spare cash sitting around but it would mean I'm not in danger of breaching the tax relief rules. Much appreciated for your answer.

NoMore

Lowtrawler said:

NoMore said:

Lowtrawler said:

Secret2ndAccount said:

Basically that is correct.  Your salary is only 7k, so you can only get tax relief on contributions of 5.6k->7k. Any more would not be eligible for tax relief so they would be worse than pointless, though not illegal.
Yes, that's a total from all sources of 65k, so you use up 5k of CF from the oldest year in which it is available, typically three years ago

My Gross salary is £65k as the £58k is via salary sacrifice i.e. the Gross would have been £123k. Does this change your answer?

Yes it does, if you have 63k of carry forward available you can put all your salary (gross) into your Pension. Possibly most tax efficient to increase your Salary sacrifice to minimum wage then make the rest of the contribution via relief at source, that would be 80% of the remaining to your pension, with the Pension claiming the rest as basic rate tax relief.

Thanks, so with £50k of carry forward available, I could pay in £52k Gross, £41.6k net? I don't have that level of spare cash sitting around but it would mean I'm not in danger of breaching the tax relief rules. Much appreciated for your answer.

Yes but more tax efficient (currently) to try and increase your salary sacrifice first.