Pension contributions

Thanks for the above - please could you also confirm the answer to the second part of my question above. I will re quote this over again for ease of reference: "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?" You have confirmed above that this IS an over-contribution, so please no confirm how this should be handled and how and where to declare this and make the tax charge payment?

Hi,

The annual allowance for 22/23, is a maximum of £40000, or the relevant earnings if the relevant earnings are below £40000. Any pension payments above the relevant earnings, is treated in the same was as pension payments above £40000. Tax relief does not apply, so the exces needs to be declared in a tax return. The excess is declared on a paper SA101 (additional information) page Ai3, box 10 "Amount saved towards your pension, in the period covered by this tax return, in excess of the Annual Allowance" and if the pension provider is paying the tax, this is shown in box 11 or the online equivalents.  

Additional information (2023)

Thank you.

Hello- I want to make a lump sum contribution to my Personal Pension pot. I have unused allowance for the last 3 years (2021-22 to 2023-24) and wanted to check that my workings are correct before I make the contribution. In year 2021-22 I earned £43k from PAYE Salary + Bonus + Side Hustle [SH] items, in 2022-23 16k from Self Employment and SH, and in 2023-24 £15k from Self Employment and SH again. In the same years I understand my Allowances would have been 40k [limited by the 40k rule as I earned more], 16k and 15k respectively. [being max. 100% of Income]. I understand that I could have therefore made 71k in contributions (being the sum of the Allowances noted above) during these 3 years. My actual Cumulative Contributions for the last 3 years were just 1,091 - which came from the PAYE employment period. As I only paid in 1,091 I believe have the ability to pay in just under 70k this year (if I had that much). I only want to pay in 35k - being the proceeds from a savings account that has matured after being locked away for 3 years. These savings came from a redundancy package after 21 years employment. I am in receipt of a DB pension (since age 50), but I have not started to take any of my Personal [DC] Pension pot. I want to add to it with this lump sum and leave it there to continue to grow for at least the next 5 years. Can you confirm that a) I can make this 35k pension contribution, and b) I will receive the tax relief on it too? Thanks

Hi Antony Jenkins

The thresholds each year, are the lower of your combined employment/self employment income and £40000.  
In 21/22 you exceeded this threshold, so there is no surplus to carry forward.  In 22/23 your threshold is £16K, so there is no surplus allowance and in 23/24 there is no surplus allowance, as the maximum allowed is £15k.  
Have a look at Check if you have unused annual allowances on your pension savings.

Thank you
 

Hi, Your website says the following: “Your annual allowance is the limit on the amount of pension savings that can be made to all your pension schemes in a tax year before you have to pay tax on them. This can be from a: defined contributions arrangement — where your pensions savings is the total contributions you (or a third party like your employer) have made defined benefits arrangement — where your pension savings is the increase in the value of your promised benefits under the pension scheme, from the start to the end of the period your pension savings are measured (from 2016 to 2017 this is the tax year) You will not be taxed on pension savings over your annual allowance if you have enough unused annual allowance from previous years to carry forward. You can carry forward unused allowance from the 3 previous tax years. This annual allowance only applies to pension savings made to your UK registered pension schemes, or to overseas schemes where either you or your employer qualifies for UK tax relief. When you cannot carry forward unused annual allowance If you have unused money purchase annual allowance, you cannot carry this forward, but you can carry forward any unused alternative annual allowance. You cannot carry forward unused allowances from any tax year where you were not a member of at least one UK registered pension scheme, or a qualifying overseas pension scheme.” So it would seem based on following figures : 2018/2019- earnings £10,000. My allowance was therefore £10,000 and unused (pension opened in.2004 but not contributed in this year) 2019/2020- earnings £10,000. My allowance was therefore £10,000 and unused (pension opened in.2004 but not contributed in this year) 2020/2021- earnings £10,000. My allowance was therefore £10,000 and unused (pension opened in.2004 but not contributed in this year) 2021/2022- earnings £10,000. My allowance was therefore £10,000 and unused (pension opened in.2004 but not contributed in this year) 2022/2023 - earnings £10,000. My allowance was therefore £10,000 and unused (pension opened in.2004 but not contributed in this year) 2023/ 2023- earnings £10,000. My allowance was therefore £10,000 and carry forward is £30,000 from previous 3 years unused. So I can add up to £40,000 this year Woth tax relief? As according to the website “ You will not be taxed on pension savings over your annual allowance if you have enough unused annual allowance from previous years to carry forward. You can carry forward unused allowance from the 3 previous tax years.” Is my assumption correct then I can add up to £40,000 based on MY previous years allowances and the carry forward rule?

Hi Molly Amas,
Please refer to:
HS345 Pension savings — tax charges (2023) Updated 6 April 2023
There is a calculator in there that will confirm what is available.
Thank you. 

Hi there, I wonder if you can answer a simple pension contributions question? In 2023/24 tax year my total earnings were £44313.75, my employer’s pension contributions and mine totalled £24837.20, therefore I am assuming that my scope for further contributions is £44313.75 minus £24837.20 = £19476.55. When I make a pensions top up via my SIPP should I be making a top up of £19476.55 and then my pension provider adds the tax rebate of £3895.31 (£19476.55 x 20%) which would then take me over £44313.75 or should I contribute £15581.24 and then my provider adds the tax rebate of £3895.31, taking the total contribution to £44313.75 exactly? Many thanks for any guidance.

Hello, can HMRC please confirm the rules around Employers making direct payments into an Employee’s SIPP. Thanks.

Hi 13Bo9,
Please refer to:
Tax on your private pension contributions
Thank you. 

Thank you to everyone who has contributed to this thread, it has made interesting reading. I have a related question and hope someone can steer me towards an answer: Do employers contributions count towards my PERSONAL income tax allowance (not my pension annual allowance). So for example if I receive an employers pension contribution of £60k straight into my SIPP and I earn another £70k via PAYE in the same tax year is my income only £70k and I still get the usual personal income tax allowances, or is my income for the year deemed to be effectively £130k and I lose any personal allowances (even though I would only pay income tax on the £70k)? Grateful for any steer. Thank you

Hi Chiefweasel

If paying into a personal pension then the contribution made would not be added to your salary to calculate your adjusted net income Personal Allowances: adjusted net income

Thank you

Thank you HMRC Admin 5, much appreciated.

Hi there HMRC, Is there a maximum weekly amount my employer is allowed to pay in Salary Sacrifice pension? They are claiming that their maximum is £847 per week and that it is a regulatory maximum. I can not find any rules that state that there is a maximum a company can pay in salary sacrifice for pension. As I understand it there is a cap of £60k per year. Assume an employee wanted the employer to pay £1,000 per week/£52,000 per year of their salary in to pension as a salary sacrifice would that be possible or are there any regulations stopping the employer from doing so?

Hi slyraccoons Palmqvist

A salary sacrifice arrangement must not reduce an employee’s cash earnings below the National Minimum Wage (NMW) rates.
Employers must put procedures in place to cap salary sacrifice deduction and ensure NMW rates are maintained.
NMW rates are at National Minimum Wage and National Living Wage rates

Thank you

Hello, Has there been any update since oct 2024 on whether minimum pension contributions will be reviewed. Currently they are 8% (5% employee and 3% employer ). I can see that the original proposal was to extend automatic enrolment to 18- to 21-year-olds and abolish the lower earnings limit for qualifying earnings. Would be great if employers earning over x revenue had to pay a higher or equal % contribution than the employee .

Hi,

There has not been any update - the following Guidance still applies:

Workplace pensions

Thank you.

Hi, I know that I can contribute to my pension as follows: ''The government lets you pay in up to 100% of your earnings into pensions, or £60,000 each year, whichever is lower.'' I am unemployed at the minute, but I have savings in the bank that let me earn around £35,000/year in pre-tax interest. Does my bank saving interest count towards the earnings I can put in my pension and still get the 25% government tax relief? Kind regards, 


Name removed admin .

Hi,
No. Savings are not earned income for pension purposes. Please have a look at the guidance at:
Tax on your private pension contributions
If you have no earned income for the tax year, you can save £2880 into your pension pot and your pension provider can claim 20% tax from HMRC, bringing you up the to the gross figure £3600.
Thank you.