Pension Carry Forward

sometime_soon

Hello all.
Looking for some input on understanding pension carry forward. Have just started a SIPP last year and paid £60k i have just discovered I had a PRU with profits pension from workplace some 30+ years ago ( whole other thread!)
Now I understand I could carry forward 3 years as I did have a pension open.
Currently HR Tax Payer ( self employed)

When assuming the earlier allowance however, am I correct in this is done on that years earnings ?
How does this then work on self assessment?
As a side note , my partner had a nhs pension also many years ago so does the same situation apply or are nhs pensions a whole different ball game?
It’s all still rather new for pension learning so don't want to get it wrong for the sake of saving tax !

	contributions	allowance
2023/24	£0	£60000?
2024/25	£0	£60000?
2025/26	£60,000	0
2026/27 (current)	£60,000	£120000

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/6670001/pension-carry-forward

First, what is your relevant earned income this tax year?

sometime_soon

https://forums.moneysavingexpert.com/discussion/comment/82013394#Comment_82013394

Should be around £80-90k for 25/26

akshayhooda

Carry forword can be very powerful, if you have unused aanual allowance from previous 3 tax years, and enough relevant earnings to support the contribution.

Just make sure you check pension, input amounts carefully, especially if you have db pensions.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/82013404#Comment_82013404

Adding £60k is doubtless great from a pension provision perspective but don't forget your higher rate relief is limited.

Assuming you paid £48k, which was topped up with the basic rate relief to make a gross contribution of £60k, then your basic rate band is now £97,700 rather than £37,700.

There may be some side benefits, increased savings nil rate band (£1,000 taxed at 0% rather than £500) and you would be eligible for Marriage Allowance (if married or in a civil partnership).

With Self Assessment you simply complete the pension contributions part of the return, and check your basic rate band is increased by the gross contribution. Your taxable income is not impacted.

Albermarle

When assuming the earlier allowance however, am I correct in this is done on that years earnings ?

Nine out of Ten threads on the forum about the Annual Allowance misunderstand it . I am not sure from your post whether you do or not, but the above comment makes me think you maybe do.

The AA is a limit on total contributions to a pension in one tax year. This includes your contributions, tax relief and employer contributions. It is the same limit however much you earn. You can bring forward unused allowance from previous years.

A separate limit is that you can not add more to a pension and get tax relief, than your annual gross earnings in the current tax year. There is no possibility of bringing forward unused tax relief from previous years.

sometime_soon

https://forums.moneysavingexpert.com/discussion/comment/82013421#Comment_82013421

Many Thanks. Yes having trawled through the forum posts, that is how I understood it but was self doubting.
For me it was more about the opportunity to add to the SIPP given I had started so late but swings and roundabouts in my mind really given the short period of time and wether the SIPP is indeed the right place to move cash into on carry forward,

DRS1

https://forums.moneysavingexpert.com/discussion/comment/82013404#Comment_82013404

If any of that income is "movable" then maybe you want to get it in this tax year?

If you only have £90k in 26/7 then you can only use up half the unused allowance from 23/4 (60k gross for 26/7 and 30k for 23/4) and next year the unused allowance for that year will fall away.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82013436#Comment_82013436

OP - Maybe an obvious comment, but your income/salary only defines the limit of how much tax relief you can get. The actual money can come from other sources, like savings.

Marcon

https://forums.moneysavingexpert.com/discussion/comment/82013404#Comment_82013404

How about 26/27, which is going to be the tax year in which the contribution (if you make one) is going to be paid?

sometime_soon

https://forums.moneysavingexpert.com/discussion/comment/82013459#Comment_82013459

Many Thanks. Yes I was doing this. Stupidity has got me so far and now trying a late learning attempt to better prepare !