Drawdown Pension

KevinDM

I recently took my drawdown pension as income although I continue paying in.

i have been advised by the company the max I can now put in one year is now 10000 including tax relief.

I have also been told I cannot go back 4 years to use up unused allowances!

Is that correct?

NoMore

yes

Annual allowance

MallyGirl

you could only have gone back to use previous allowances (carry forward) if you had enough income to support it in this year I.e. over £60k

That became irrelevant once you had triggered the MPAA by taking taxable income from the pension. There would have been warnings about this when you requested the drawdown

QrizB

We might be able to offer a bit more help if you can give some background to your circumstances - how you got to be in this position - and what it is that you're trying to do now?

Marcon

i have been advised by the company the max I can now put in one year is now 10000 including tax relief.

If you're in employment, that £10K maximum includes any employer contributions, not just your own.

If beefing up your pension is a top priority, then the only way to be able to contribute more than 10K a year is to find a job offering a defined benefit pension scheme (the MPAA only applies to contributions to a defined contribution pension scheme) - which is almost certainly going to be in the public sector.

Albermarle

i have been advised by the company the max I can now put in one year is now 10000 including tax relief.

It is called the MPAA limit. Almost certainly your pension provider will have warned you about this when you requested to drawdown your pension.

UKTaxHelper

The £10k only applies from the date you took the income. Anything you paid in earlier this tax year gets tested against the wider allowance, not the 10.

ClashCityRocker1

https://forums.moneysavingexpert.com/discussion/comment/82105884#Comment_82105884

You are right about the MPAA but wrong about the income. You can put in up to the amount you earn and still get tax relief - the £60K limit is separate so you can still backdate even if you earn less than £60K

artyboy

https://forums.moneysavingexpert.com/discussion/comment/82106750#Comment_82106750

No you can't. You can only carry forward (not 'backdate') if you have already used up the current year's £60k annual allowance. Which requires that you have income in excess of that for starters.

This misunderstanding comes up again and again on this board…

ClashCityRocker1

https://forums.moneysavingexpert.com/discussion/comment/82106816#Comment_82106816

sorry, you are wrong. If you earn £50K you can put in £50K on top of defined benefit input. If that takes you over £60K you can use carry forward

NoMore

There actually is no limit to amount you can contribute to pensions,

just above certain limits you get either a charge (>AA results in AA charge) or restricted (>relevant uk income, no tax relief) or as in the OP example the MPAA has been triggered (Carry forward now restricted, AA dropped to 10k, breaking it results in AA charge) Going beyond these limits for most people are not worth it due to not being tax efficient.

ClashCityRocker1 its right, it's quite feasible that somebody with an income of less than 60k could use carry forward to extend their AA, due to things like Employer contributions or PIA using large amounts of the AA.

Pension schemes rates - GOV.UK