Redundancy paid into pension via employer contribution

I would like my employer to pay all of the taxable element (£70k) of my redundancy pay into my DC pension as an employer contribution (redundancy sacrifice). However, this employer contribution would mean that the total contributions to my pension would exceed my taxable earnings (£55k before the redundancy pay) in the current tax year. I have enough unused pension annual allowance in the current tax year and from the previous 3 tax years to carry over. My question is: I have read that a condition of using pension annual allowance carry forward is that total pension contributions must not exceed total taxable earnings in the tax year that the pension contributions are made. But does this requirement apply when the pension contribution is made by way of an employer contribution? Thank you

To add to this thread for the sake of clarity, I have amended my question as follows: I have read that a condition of using pension annual allowance carry forward is that total pension contributions must not exceed total taxable earnings in the tax year that the pension contributions are made in order to avoid incurring liability for a pension annual allowance tax charge. But does this taxable earnings requirement apply when the pension contribution is made by way of an employer contribution? Thank you

Hi,
The pension threshold in 2023 to 2024 is either the total of your income earned or £60000, which ever is the lower.  
You can carry forward unused allowance from the 3 previous tax years and add it to your threshold for the year, increasing it by the amount carried forward.  
Where you exceed the new revised threshold, you need to report the difference in a self assessment tax return, so that it can be taxed accordingly. Check if you have unused annual allowances on your pension savings
Thank you

Thank you for the reply. However, I am still a bit unclear on the conditions for using pension annual allowance carry forward when contributions are made by way of employer contribution. Is it the case that an employer can contribute into an employee's pension more than the employee earns, up to the 2023/24 annual allowance of £60,000, or more than that if the employee is able to carry forward unused pension annual allowance from the 3 previous tax years?

Hi,

Your employer's contribution to your pension, does not count towards the pension relief threshold. It is only your payment that counts. You can see guidance here:

Tax on your private pension contributions

Thank you.

Thank you for the clarification.

Hi 2greenwilloW2,
You can contribute more than the annual allowance of £60,000 each year but would be liable to pension tax charges by doing so.
The charge would then be reduced if you do have any unused allowance from the previous 3 tax years.
Thank you. 

Hi. A further question apologise if it’s a silly one. I sacrificed severance to pension and with the assistance of an IFA calculated the taxable element after applying the unused element of the three years allowances. The IFA and my employer confirmed the taxable amount to show. My issue is where to show it in the self assessment there seems a large number of options :). I called the helpline but the operator and his boss both insisted it’s not taxable at all….I wish :).

Hi. Does the moderator require more information to reply ? Thank you

Hi
If your pension payment is below the pension threshold, then there is nothing to report in your tax return.  You only need to report the excess above the threshold, as this sum does not qualify for tax relief.

Apologies I wasn’t clear , I am above the threshold per IFA advice and know the figure I need to input , I don’t know which section to show it in to ensure NI is not in the calculation. I am already 44years fully paid so well above any requirements and im told it doesn’t attract NI anyway. When I input simply as income it seems to attract NI. As a supplementary question. The form online states in the final calculation that it ignores any payments on account and in a few days they will be reflected in your statement. Is that only after the submit button is pressed ?

Hi,
From your earlier question you state you sacrificed a severance which suggests this is salary sacrifice and as such you cannot claim tax relief on this pension payment.
Tax on your private pension contributions
Thank you.

I am obviously failing to explain this so will revert to calling the helpline again. I have already checked and confirmed with independent experts the amount to declare. The question that I keep asking is where to show that amount in the self assessment which no one has yet been able to answer. Let’s close the trail. Thank you.