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Posted Thu, 20 Jun 2024 10:16:20 GMT by PeeBee
I have been offered voluntary severance from my employer, this is capped at £90,000. I'm looking at potentially putting £60,000 of this into my AVC which I've been paying into for 5 years. I'm aware of the £60,000 limit for tax relief per year, however with my current monthly payments into my AVC and pension contributions into my DB pension i will go over this limit. I'm aware that you can use any unused allowance from the previous three years, however I'm not really sure how this works and whether i have to complete any forms etc and do i need to get statements for the current 2024/2025 year and the previous three years showing all of my pension contributions (AVC and DB) ? Just to add my salary puts me into the 40% tax band.
Posted Wed, 26 Jun 2024 09:42:42 GMT by HMRC Admin 21 Response
Hi PeeBee,
You only need to report anything if you have a charge to pay. You should keep the records for yourself based on guidance at HS345 Pension savings — tax charges (2024).
Thank you.
Posted Sat, 29 Jun 2024 10:02:14 GMT by PeeBee
Thank you for the reply. I have a few more questions. I will be leaving my employment on 31-12-2024, would this mean that the £60,000 tax free allowance for my AVC contributions would be £45,000 due to me working only 9 months of the 2024-2025 financial year? Also my salary is £71500 per year , however with only working 9 months my salary for the 2024-2025 tax year will be around £53,625, would this mean the maximum amount i could pay into my AVC would £53,625? If i went over this amount would this be OK due to the carry forward from previous years?
Posted Wed, 03 Jul 2024 13:28:03 GMT by HMRC Admin 10 Response
Hi
The £60.000 allowance is for the full year and not apportioned. The tax relief on your pension is limited to what your earnings are for the year so based on your figure it would be £53625.

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