Pension contributions

My salary is £28,500. I know I can pay 100% of this into my pension and receive tax relief on this. However, I have unused allowance from the three previous years of approximately £15,000 per year therefore can I receive tax relief on pension contributions of £73,500 (£28,000 + £45,000) in this year year even though that’s over 100% of my salary? Thank you

Hi Littletres,

There would be no additonal benefit on this. Tax relief at 20% will have already been given on your pension payments.
The unused relief to bring forward would only apply when you exceed £40000 into a pension and as this is over your salary, no additional relief would be due.

Thank you.

I have similar question regarding unused pension contribution. This is my scenario: Annual salary £30,000 (the same through out the years) Unused Pension 2022/23 - £10,000 Unused Pension 2021/22 - £10,000 Is £80,000 the maximum amount my employer can put into my SIPP pension pot ? £60,000 -- 2023/24 £10,000 -- 2022/23 £10,000 -- 2021/22 Based on your above reply on tax relief, that mean these portion will not have tax relief. Am I right ? £30,000 -- 2023/24 £10,000 -- 2022/23 £10,000 -- 2021/22

Hi Stan C

You can only get tax relief on the maximum of what your salary is. As you have stated its £30,000, you would only qualify for £30,000 relief.
The unsued part you are refering to is to ensure that you do not incur a charge for exceeding the annual amount - £60,000 for 23/24 and previously £40,000.
Further guidance can be found here -
https://www.gov.uk/tax-on-your-private-pension


Thank you

Thank you for confirming my understanding. If employer make direct payment to my SIPP provider for additional pension contribution, I can only claim tax relief by submitting self assessment ? (SIPP provider told me that they will not handle tax relief submission for employer contribution.) Can you please advise which section I need to fill in ? I suppose it is related to Page TR4 of SA100 but dont know which box is the right one(s). I consider them not suitable because: Box 1 -- pension provider expressed that they will not claim tax relief on my behalf Box 2 -- this is not about annuity Box 3 -- not my employer's scheme, it was paid to my own SIPP Box 4 -- this is not an overseas pension scheme The only left out is Box 1.1 , it is a one-off contribution for my case but this option didnt describe clearly if pension provider will claim tax relief or not. In additiaon, if £80K addtional pension contribution is made in Mar-2023, shall I submit three self-assessments like below. 2020/21 -- submission deadline had passed, will this cause any problem like penalty due to late submission ? 2021/22 -- submission deadline had passed, will this cause any problem like penalty due to late submission ? 2022/23 -- due on Oct-2023 (paper form)

Hi Stan C,

Your employer can make a gross payment into your Self Invested personal Pension (SIPP).  
The current maximum you can pay into a pension each year is £60000 tax free.  
Pension contributions above this amount will not receive tax relief and any relief received, would have to be repaid.  
Any money that is paid into your pension counts towards this allowance, including contributions from yourself, your employer and tax relief.  
To claim relief on the employer element of your pension payment, you would need to declare in box 2, bearing in mind, the aformentioned threshold.

Thank you.

Do I need to submit 3 self assessments (according to the tax year with unused pension allowance) seperately or just making one submission with the total value in the current year ? If this is the case that means HMRC will automatically apply the unused pension allowance from the earliest to most recent year for me ?

Hi Stan C

No, you do not need to submit 3 years' returns. You need to work out what relief is due for you and if you still have anything over the relief, it is that figure you put on the return.
We dont apply it automatically - see further guidance at Pension savings — tax charges (Self Assessment helpsheet HS345)

Thank you

@Stan C You seem very confused. You are referring to contributions made by your employer. You can never get any tax relief in respect of contributions made by your employer and you wouldn't include them on the pension tax relief section of a tax return. Before you proceed any further I suggest you get a better understanding of the different methods pension contributions can be made by.

@ sportyfae I am indeed quite confused because I could not find clear rules & examples in HMRC website or other places which describes tax relief calculation for my case. Refer to the 3rd point mentioned in HMRC website, if "someone else pays in to your pension" can cause oneself to claim tax relief. Then I think "employer pays in to my pension" is the same situation isnt it ? https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief Claiming tax relief yourself In some cases, you need to claim tax relief on pension contributions yourself. You’ll need to make a claim if: - you pay Income Tax at a rate above 20% and your pension provider claims the first 20% for you (relief at source) - your pension scheme is not set up for automatic tax relief - someone else pays into your pension

Gov.uk cannot cover eventually eventuality and isn't always correct. You would be better off with HMRC internal manuals, which helpfully are publicly available. You will see from this that you are not entitled to any tax relief on contributions made by your employer. https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100

@sportyfae, I have located the relevant section from the tax manual. It explained the reason behind why contributions paid by employer not qualify for tax relief and this is the ultimate answer that I need. Thank you very much, Sections 188(3)(b) and 201 Finance Act 2004 Contributions paid by a member’s employer do not qualify for tax relief for the member. No liability to income tax arises to an individual member in respect of earnings where the individual’s employer makes contributions into a registered pension scheme.

I have similar question regarding pension contributions. This is my scenario: Salary 2022-2023 £30,000 SIPP contribution 2022-2023 - £32,000, grossed up to £40,000 within the SIPP Previous three year salaries and pension contributions of £0, but pension contributions and salary in years prior to this. As the SIPP contribution is greater than the annual salary in 2022-2023, the contribution exceeds the allowable limit for the tax year. Therefore there is £10,000 of excess contributions this tax year. What would be the tax implications of this excess contribution? Can carry over from previous years be used to cover this excess?

Hi,
 

Please see link: Tax on your private pension contributions   . Thank you.

Thanks for your feedback HMRC Admin 17. I have reviewed this page and I do not believe that this applies in this case. This is a case of SIPP contribution > earnings, not a case of SIPP contributions > 40k or 60k annual limit. Could you please take another look at this case and let me know what to do about the excess £10,000? Thanks

Hi pensions advice,

If your pension contributions are in excess of your relevant earnings in a tax year, you can carry forward unused allowances from previous years.
Please refer to the following guidance:    
Earnings that attract tax relief                                          
Check if you have unused annual allowances on your pension savings

Thank you.

 

Thank you for your feedback HMRC Admin 20. Based on these references could you please confirm whether the following scenario is permissible? Year 0 - Zero eligible earnings, £1 pension contribution. Year 1 - Zero eligible earnings, Zero pension contributions Year 2 - Zero eligible earnings, £40k pension contributions (utilise unused max allowance from year 1) Year 3 - Zero eligible earnings, £40k pension contributions (utilise unused max allowance from year 2) Year 4 - Zero eligible earnings, £40k pension contributions (utilise unused max allowance from year 3) Year 5 - Zero eligible earnings, £40k pension contributions (utilise unused max allowance from year 4) Year 6 - Zero eligible earnings, £40k pension contributions (utilise unused max allowance from year 5) Year 7 - Zero eligible earnings, £40k pension contributions (utilise unused max allowance from year 6) Year 8 (2023-2024) - Zero eligible earnings, £40k pension contributions (utilise unused max allowance from year 7) Year 9 (2024-2025) - Zero eligible earnings, £60k pension contributions (utilise unused max allowance from year 8) For each tax year there are no eligible earnings, so the max relief for that year is £2880. But this can be exceeded by utilising past years unused allowances? So in each year, rather than worrying about the £2880 relief, we can simply utilize the unused £40k allowance from the previous tax year? As long as there is one unused year at the start, and the £2880 doesn't change, then this can be done in perpetuity? So in effect it is permissible to contribute the maximum allowance into a SIPP every year where HMRC provides a 20% gross up with zero eligible earnings, by utilising previous years unused allowances? No extra tax would need to be paid in the tax return to refund the 20% gross up by HMRC? The only times this wouldn't work, is when allowances such as the 40k/60k yearly allowance changes. Am I missing something? Thanks

Hi,

You can see guidance here:

Tax on your private pension contributions

Annual allowance

Thasnk you.
 

HMRC Admin 20 - please can I check the advice you gave above? This seems wrong - as I understand it, whilst you can rollover unused Annual Allowance for pensions you can NEVER rollover unused Relevant Earnings? i.e. your contributions each individual year are limited by the Relevant Earnings for that year (even if you have not used the full amount from a previous year). I am in a similar position as the original questioner as regards having over-contributed to a pension above my Relevant Earnings. i.e. I am NOT above the annual allowance, but I am above the relevant earnings for that year (I am non-resident so I do not get the benefit of any annual allowance anyway). I have a huge amount of unused contribution from the prior year as my Relevant Earnings last year were a lot higher and I did not contribute much to the pension that year, but as I understand it, I cannot utilise that on a rollover basis and my contributions this year are still limited to my Relevant Earnings for this year only (i.e. I cannot use any surplus from last year). Please can you confirm which is correct on this? (your answer above stated that "If your pension contributions are in excess of your relevant earnings in a tax year, you can carry forward unused allowances from previous years." - I don't think this is right and in the example I give below the 22-23 pension contributions are still limited to 12k despite the unused relevant earnings from the prior year?) To give you figures to make it easier : tax year 21-22 : Relevant Earnings = 50,000 / Pension Contribution = 10,000 (so 40k unused) Tax year 22-23: Relevant Earnings = 12,000 / Pension Contribution = 18,000 (i.e. 6k over the Relevant Earnings) For the above scenario (and for a Non-resident) can the unused 40k Relevant Earnings be rolled over so that the 18k contribution in the second year is permitted even though it is above the Relevant Earnings for that year? Or is this counted as an over contribution so a tax charge will arise on the 6,000 over contribution? Second question : if the 6,000 is an over contribution and there is a tax charge, how should this be declared/paid? The Self Assessment forms only have a box for Annual Allowance tax charges, not for over contributions above Relevant Earnings, but can I just declare this in the annual allowance boxes even though it doesn't really relate to the 40k annual allowance as such since it is the same type of issue creating a tax charge on the over contributions of 6,000? Many thanks

Hi A N,
You are correct that you can carry forward any unused annual allowance so that you may reduce/negate any pension tax charge that may be due.
You cannot carry forward unused relevant earnings. tax relief on pension contributions is limited to the amount of your salary for the year and if you exceed this, there is no benefit to making a higher contribtion.
Contributions themselves also cannot be carried back to ealier years in order to maximise the relief due on the payment.
The links given in the previous replies confirm this.
Thank you.