Claim back tax from carry forward pension

Hi This year I paid the maximum into my pension to account for last year, and 2 prior years before. This means that I paid an extra 33.5k(there abouts) for 2020-2021 and 33.5k 2021-2022 and my employer paid every year around 6.5k. This using the 40k pension allowance for 2020-2021 and 2021-2022. How do I claim back the taxes on this? I sent a letter to the self assessment team, but I don't know if there is a specific form. Kind regards B.

Hi,

The payment will only give relief for the current year as pension payments are not backdated. You will need to provide evidence of the payment in order to claim so if this is not with your original letter, you will need to write in again.

Thank you.

Hi This seems contrary to that is stated in the website: https://www.gov.uk/guidance/check-if-you-have-unused-annual-allowances-on-your-pension-savings "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." You will not be taxed - the tax was already taken, carrying it forward means we can claim it. Otherwise "you will not be taxed" looses it's meaning. And look how this guidance doesn't specify "the current year". Meaning if you were taxed for what you put in your pension as per the allowances, carry forward or not, and there is no refund, then it actually means you are taxing pension contributions within the allowances.

Hi, I am not a HMRC Admin but think (or hope) I can help explain it. It is a carry forward of unused pension allowance to the current year. Not a carry back of pension contributions to a previous year. It is to enable you to make a greater contribution in the current year if you've used the current years allowance. Normally if you exceed your annual allowance you'd be liable to a tax charge. But if you have enough annual allowance from the previous years then this would enable you to pay in more (as long as you have sufficient relevant earnings in the year the contribution is made, to cover the increased contribution) without getting a tax charge.

The carrying the unused allowance is clear. The recovery of taxes isn't as the language isn't clear. Pension providers always put an uplift of 20% on the contributions, this is claimed from HMRC. If you put a carry forward, the HMRC contributes the 20% of these contributions - puts back tax it has taken. However some people are on the 40%/45% tax bands, meaning there is extra 20%/25%. This is the missing recovery.

That is what I'm explaining. The contributions are given relief in the year the contribution is made. Let me use numbers to try help demonstrate. Say you earn 100k this year and contribute 60k to your SIPP (we will ignore employers contributions for now to keep it simple, but they also count towards the annual allowance). The provider would add 15k in tax relief bringing the total you contributed to 75k. Normally that would be above your annual allowance and result in a tax charge. But if you had sufficient unused allowance from the previous years, no tax charge would be created. As you added 75k to the pension, your basic rate band would be increased by this amount to 112,700. Now you'd pay 0% on 12570 covered by the personal allowance. That leaves 87430 liable to tax. As this is less than the increased basic rate band, all of it would be due tax at 20% bringing the tax to 17486. Had you not made that contribution you would've paid 20% on 37700 and 40% on 49730, bringing the tax to 27432. And if you'd earned more than 100k then the saving would be more as then you'd be able to use more of the increased basic rate band. If I'm not helping, please say and I'll stop posting. I don't want to confuse matters more for you.

Hi elbruce,
The unused allowance only means that you can pay more than the annual allowance in 1 year without having a tax charge.
Actual tax relief is still limited to your level of earnings - Tax on your private pension contributions
Thank you.

@BellaBoo very nicely and clearly explained.