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Posted Fri, 18 Aug 2023 21:34:27 GMT by Jason
I’m struggling to find out the correct answer to this scenario regarding what is the carried forward annual pension allowance. The figures are deliberately exaggerated. Say I earned £10,000 of self employed income for the last 3 years. Each year I made a £5,000 payment (gross) into my SIPP as my partner earns much more and pays for everything (lucky me!) This year has finally been a bumper year and I earned £95,000. I know the maximum gross contribution I can make into my SIPP is £60,000 for this tax year. But if I want to pay more in (upto my earned income of £95,000) is the carry forward amounts for the previous years £5,000 per year (based on the amount of earned income not used for the years pension contribution) ? Or is it £35,000 per year based on the previous annual allowance of £40,000? The difference would be being able to pay a maximum of £75,000 into the pension this years Vs upto £95,000. Thank you.
Posted Tue, 22 Aug 2023 12:48:20 GMT by HMRC Admin 17

Please refer to guidance at :

HS345 Pension savings — tax charges (2023)

and in particular the link to the annual allowance calculator   >

Thank you
Posted Fri, 25 Aug 2023 06:09:46 GMT by Jason
Thanks for the reply but I have already read the linked page and also used the annual allowance calculator and have still not found the answer to my question. The linked page only states that the annual allowance for the 22-23 tax year is £40,000 and that you can carry forward unused allowances from the previous three years. It doesn’t state whether the unused allowances from the previous three years is capped at your earned income allowance for each of those years if that is lower than £40,000? Using the calculator, there is no input for your earned income for each year. So am I correct in assuming that the carried forward allowance for the last three years is the difference between £40,000 and contributions made and if the earned income in those years was less than £40,000 it does not effect the carried forward amount?
Posted Thu, 31 Aug 2023 07:00:41 GMT by HMRC Admin 25
Hi Jason,
The threshold is the lower of your earned income or £40000, when working out the carry forward figure.
Eg.  21/22 earned income was £30000.
The carry forward is £30000 - payments made to the penson scheme =  carry forward amount.
Thank you. 

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