Can anyone kindly confirm how much I can pay into my SIPP each tax year?

Smudgeismydog

Albermarle said:

Smudgeismydog said:

zagfles said:

RoysV said:

Albermarle said:

There is a limit on how much you can add to a pension each year of £60K ( regardless of how much you earn) . This also includes any employer contribution.
As you will be adding £58K (gross) then presuming your employer also contributes you will be over his limit.

However if you did not add £60K last tax year, you can utilise any unused allowance for the last 3 years ( noting it was £40K until a couple of years ago) .

Regarding the 20%/25% .

If you earn a £100 and pay tax of 20% , you have £80 left.
If you then add £80 to a pension it has to be increased by 25% to get back to £100.

That doesn't apply to the OP does it as he's only earning £58k so has no carry forward allowance? Apologies if I've mis understood how it works

You have misunderstood how it works. You don't need to earn over £60k to use carry forwards. Don't worry, even IFAs get this wrong. 

If OP earns £58k and has over £2k in employers contributions, then he can use carry forwards to sal sac down to min wage and contribute the rest of his gross income to his SIPP. Total pension input amount is over £60k. 

Contributions are the lower of;

- £60,000
- 100% of salary

Therefore, if you earn less than £60,000, you cannot use carry forward.

The £60k annual allowance includes employer contributions.
So for example if you earned £50k and added the whole lot ( gross) to a pension(s)
Then your (generous ) employer added £15k , then you would be over the £60k limit unless you could carry forward unused allowance from previous years .

Thanks, think we posted simultaneously.

However, my understanding is that you need to use the full £60,000 annual allowance this year before carrying forward. So if your income is less than £60,000, you can’t carry forward, as you don’t have the earnings to support it.

Smudgeismydog

This page has all the answers you need: Carry forward of pension annual allowance - Royal London for advisers

Dazed_and_C0nfused

Smudgeismydog said:

This page has all the answers you need: Carry forward of pension annual allowance - Royal London for advisers

And this has some that you need.

https://adviser.royallondon.com/articles-and-guides/pensions/carry-forward-where-do-people-go-wrong/

Smudgeismydog

Dazed_and_C0nfused said:

Smudgeismydog said:

This page has all the answers you need: Carry forward of pension annual allowance - Royal London for advisers

And this has some that you need.

https://adviser.royallondon.com/articles-and-guides/pensions/carry-forward-where-do-people-go-wrong/

Thank you;

Getting mixed up between annual allowance and tax relief

When you are using carry forward, you are working out the unused annual allowance not unused tax relief. So, it’s important to remember that for an individual contribution, the client will still need earnings in the year of payment to support the contribution. For example, if there is £100,000 worth of unused annual allowance, the client will need earnings of at least this in order to make an individual contribution of this level and receive tax relief.

A client with earnings of less than £60,000 will likely not need to use carry forward if they are making an individual contribution as this is within the standard annual allowance for 2024/25.

QrizB

So we're all agreed then - OP's gross personal contributions can't exceed their post-salsac gross salary, but if those personal contributions cause their total (employer+personal) pension contributons for the year to exceed £60k they can make use of whatever carry-forward they have available.

I'm glad we sorted that out!

Editd for an annoying typo.

zagfles

Smudgeismydog said:

QrizB said:

Smudgeismydog said. 

Contributions are the lower of;
- £60,000
- 100% of salary

I don't think that's the whole truth.

Smudgeismydog said:

Therefore, if you earn less than £60,000, you cannot use carry forward.

And, because the former part isn't the whole truth, this statement is incorrect.

Member contributions

There’s no limit on the amount that an individual can contribute to a registered pension scheme. If you’re a UK resident aged under 75 you may receive tax relief on your contributions to registered pension schemes.

Tax relief is limited to relief on contributions up to the higher of:

• 100% of your UK taxable earnings
• £3,600

For 2025/26 the tax free annual limit is 100% of your salary or £60,000 (whichever is lower). This includes both contributions paid by you and contributions paid by your employer.

Limits to tax-free contributions

An annual allowance limits the amount someone can pay into pension schemes each year before they must pay income tax. In 2025/26, people can contribute up to £60,000 into pension schemes without paying income tax.

Usually, people cannot receive tax relief on pension contributions above their annual earnings. However, people can still contribute up to £3,600 a year, including tax relief, even if their earnings are lower than this (see box 4 below).

I’ve taken all of the above quotes from Government and other reliable sources 

The middle paragraph is rubbish. It didn't come from gov.uk

zagfles

Smudgeismydog said:

Albermarle said:

Smudgeismydog said:

zagfles said:

RoysV said:

Albermarle said:

There is a limit on how much you can add to a pension each year of £60K ( regardless of how much you earn) . This also includes any employer contribution.
As you will be adding £58K (gross) then presuming your employer also contributes you will be over his limit.

However if you did not add £60K last tax year, you can utilise any unused allowance for the last 3 years ( noting it was £40K until a couple of years ago) .

Regarding the 20%/25% .

If you earn a £100 and pay tax of 20% , you have £80 left.
If you then add £80 to a pension it has to be increased by 25% to get back to £100.

That doesn't apply to the OP does it as he's only earning £58k so has no carry forward allowance? Apologies if I've mis understood how it works

You have misunderstood how it works. You don't need to earn over £60k to use carry forwards. Don't worry, even IFAs get this wrong. 

If OP earns £58k and has over £2k in employers contributions, then he can use carry forwards to sal sac down to min wage and contribute the rest of his gross income to his SIPP. Total pension input amount is over £60k. 

Contributions are the lower of;

- £60,000
- 100% of salary

Therefore, if you earn less than £60,000, you cannot use carry forward.

The £60k annual allowance includes employer contributions.
So for example if you earned £50k and added the whole lot ( gross) to a pension(s)
Then your (generous ) employer added £15k , then you would be over the £60k limit unless you could carry forward unused allowance from previous years .

Thanks, think we posted simultaneously.

However, my understanding is that you need to use the full £60,000 annual allowance this year before carrying forward. So if your income is less than £60,000, you can’t carry forward, as you don’t have the earnings to support it.

The example above proves you wrong. Earnings £50k. Employer conts £15k.

Full £50k contributed to a pension. Total pension input amount therefore £50k plus £15k = £65k. Therefore carry forwards is required and CAN be used (subject to the usual rules).