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Posted Sat, 25 Nov 2023 12:36:04 GMT by
Good Afternoon I hope you can help. I am thinking of topping up my private pension with a lump sum, but I would like to confirm if I am using the annual allowance and tax relief rules correctly please. 2023/4 (so far): Taxable income: £17,283.70 Pension contributions: £1,200.10 2022/3: Taxable income: £32,900.58 Pension contributions: £2,709.79 2021/2: Taxable income: £31,038.58 Pension contributions: £2,276.04 2020/1: Taxable income: £27,653.37 Pension contributions: £2,395.96 Remaining annual allowance for 2023/4: £16,083.60 Remaining unused annual allowances for 2020/1 to 2022/3: £84,210.74 (£91,592.53 taxable income minus £7,381.79 pension contributions). I was thinking of adding in £20,000 to the pension and I believe I should get a £5,000 top up through tax relief with this. Therefore for 2023/4 I would have made pension contributions of £26,200.10 (£1200.10 regular contributions, £20,000 lump sum payment, £5,000 tax relief top up for lump sum). This would therefore use up my full annual allowance for 2023/4 and some of my previous years unused allowance. There will be future regular contributions + an increase in taxable income for 2023/4, but I believe this would not change the outcome? Is my understanding correct please? If I choose to add £20,000 to my pension, will I receive the full tax relief of £5,000 on this? Am I ok to use my previous years unused annual allowances to get the full tax relief on this? Thank you so much
Posted Tue, 28 Nov 2023 15:44:25 GMT by HMRC Admin 17

We cannot comment on scenarios in this forum. 

Where your pension payment exceed the threshold in a tax year, you can elect to carry forward the balance
of the unused pension allowance from the 3 previous tax years. 

This can be added to increase your threshold. 

Where the new threshold covers the pension payment, there is nothing else to do. 

If it does not, you will need to complete SA101 and declare the amount above the threshold,
as it will not qualify for tax relief .

Thank you .


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