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Carry forward to pension scheme or SIPP
KCartwright
Posts: 8 Forumite
I worked for a company from 2015 to Feb 2018 and was enrolled into their workplace pension scheme with Scottish Widows. Since Mar 2018 I have worked for my limited company.
In 2019 I opened a new SIPP account and made company pension contributions to it, exhausting my annual limit for 40K. There are funds available in the company to make more contributions for previous years - 2016-17 & 2017-18.
Is it possible to contribute the remaining carry forward allowance (around 70K) for these years to my SIPP, even though the SIPP account didnt exist in those years?
In 2019 I opened a new SIPP account and made company pension contributions to it, exhausting my annual limit for 40K. There are funds available in the company to make more contributions for previous years - 2016-17 & 2017-18.
Is it possible to contribute the remaining carry forward allowance (around 70K) for these years to my SIPP, even though the SIPP account didnt exist in those years?
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All pensions , workplace, SIPP, personal etc are treated the same by HMRC and the same tax rules apply to all . So I would presume it does not matter that you changed pension provider in the meantime .1
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Yes as long as you had an appropriate scheme during those years, which you did. it doesn't matter what you contribute to, you could open another if you like.
I presume the company will be making the contributions? Would be slightly salary dependent (may be subject to tapering) so if you want confirmation, confirm salaries!1 -
Thanks Albermarle & Andrew.
Regarding salary, I withdraw 12K a year in salary and 35K in dividends. However since this is employer contribution, I thought my salary would not impact the pension contribution amount.
I may be wrong but from what I have read, its the personal contributions that have to take salary into account (to make sure contributions do not exceed salary for the year).
I have already contributed 40K for 2019-20 and looking to contribute ~35K for year 2016-17 and ~35K for year 2017-18 next month. I am not sure tapering would impact this though.0 -
KCartwright wrote: »Thanks Albermarle & Andrew.
Regarding salary, I withdraw 12K a year in salary and 35K in dividends. However since this is employer contribution, I thought my salary would not impact the pension contribution amount.
I may be wrong but from what I have read, its the personal contributions that have to take salary into account (to make sure contributions do not exceed salary for the year).
I have already contributed 40K for 2019-20 and looking to contribute ~35K for year 2016-17 and ~35K for year 2017-18 next month. I am not sure tapering would impact this though.
If the company is paying £12k of salary and £110k of pension, that's only £122k total remuneration so should not cause the 2019/20 £40k allowance to taper down.1 -
Cheers Bowlhead.bowlhead99 said:KCartwright wrote: »Thanks Albermarle & Andrew.
Regarding salary, I withdraw 12K a year in salary and 35K in dividends. However since this is employer contribution, I thought my salary would not impact the pension contribution amount.
I may be wrong but from what I have read, its the personal contributions that have to take salary into account (to make sure contributions do not exceed salary for the year).
I have already contributed 40K for 2019-20 and looking to contribute ~35K for year 2016-17 and ~35K for year 2017-18 next month. I am not sure tapering would impact this though.
If the company is paying £12k of salary and £110k of pension, that's only £122k total remuneration so should not cause the 2019/20 £40k allowance to taper down.
I also drew 35K dividends. Does that get added to the £122K number for AA calculation and if needs tapered down?
I will MVL the company soon, with £80K of capital distribution in 2020-21. Does that get added to the total remuneration for 2020-21, with a likely taper down impact on AA?0 -
Well,KCartwright said:Cheers Bowlhead.
I also drew 35K dividends. Does that get added to the £122K number for AA calculation and if needs tapered down?
I will MVL the company soon, with £80K of capital distribution in 2020-21. Does that get added to the total remuneration for 2020-21, with a likely taper down impact on AA?
a) Yes £35k of dividends is income and counts towards the threshold income and adjusted income measures for considering tapering of allowance. You could find the guidance on working out your reduced (tapered) annual allowance on the gov.uk site but there will be various pieces on accountants or tax advisers' websites which might do a better job of explaining.
b) Capital distributions do not affect income tax - they are dealt with under capital gains tax. Presumably the reason you are going the MVL route is that you want to get the capital treatment and not take a dividend. Capital proceeds received (even if it mostly represents a gain) is not income or relevant earnings for supporting pension contributions or creating income tax bills.
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