AVCs and carry over

lionheart79

Hi all, I am in a position this year to max my pension contributions and to make up gaps by using carry forward from a prior year. I am however mindful that if you contribute over £60k attributable to a single year then you get penalised. 

I have a workplace DC scheme that contributes via salary sacrifice monthly. I also have a SIPP that I contribute to net of salary on an ad hoc basis. 

If you have to use up this year's allowance first, how can I be sure to not go over the £60k total before allocating to prior years? Maybe this sounds like I'm overthinking it, as I have loads of carry over to use so no fear of running out of available allowance. However my SIPP provider asks which years my contributions are allocated against, which makes me think I have to get it to add up to £60k exact (alongside my workplace scheme, and there are questions over when the final payment will land this financial year).

Or can you you leave a buffer at say 58k for this tax year, forgo the rest and just start using FY22/23 carry over from this point? 

cheers

Albermarle

I think ( not 100% sure ) that it is unusual for the pension provider to ask which year to allocate against.
Normally you do not have to do anything, or even inform anybody what your are doing. So if you add £70K, the HMRC system will automatically look back to three years previous to see if you had unused allowance that year. If not it will check two years previous etc . I think that is how it works.

Presume you know that regardless of the annual allowance, you personally can not add more this tax year gross than your annual gross salary? Just asking, as we see many people on the forum  getting the two issues mixed up. 

dunstonh

If you have to use up this year's allowance first, how can I be sure to not go over the £60k total before allocating to prior years? 

You must keep a record of your calculations.    
So, you would show how you have used up the £60k for this year before then applying the further amounts over the previous years.

However my SIPP provider asks which years my contributions are allocated against, which makes me think I have to get it to add up to £60k exact (alongside my workplace scheme, and there are questions over when the final payment will land this financial year).

Never have I been asked to provide that.  The pension provider is not required to know.   Who is your SIPP provider?   

That said, you are required to know your calculations and should be able to explain them.

Or can you you leave a buffer at say 58k for this tax year, forgo the rest and just start using FY22/23 carry over from this point? 

No.  You have to use the whole £60k in this tax year before you can use carry forward.

Do you have sufficient earnings (or are you using employer contributions) to be able to use carry forward?

e.g., if your total contribution is £100k, including carry forward, then you need earnings of £100k or employer contributions.

lionheart79

Thanks both. Turns out I was incorrect, although I could have sworn I saw it in the past. I am using Interactive Investor - maybe it because it shows how much you have contributed (out of 60k for the year) which confused me (naturally it does not and cannot account for contributions elsewhere).

My income is sufficient to cover off my proposed carry forward contributions but it is a good thing to point out. 

Since I won't know the exact employer contributions until next tax year I'll have to complete my calculations then but I will have a massive buffer (both in carry forward and income) so rough estimation will be fine. thanks for putting my mind at ease!