Bringing forward unused pension contributions

[teapot418]

This teapot isn't as young as it used to be. There's a few cracks in my glazing, my innards are gunked up with tannins, and my spout occasionally drips embarrassingly.

So I'm looking to chuck as much money as I reasonably can from myCo into my SIPP before Hector decides I can no longer do this.

My understanding is that I can put in 40K a year, and that I can bring forward unused allowance from the previous three years (my SIPP was in place then). So if I put in, say, £60K this year, that would be this year's allowance, and an unused 20K from three years ago.

My question is whether I have to do anything specific to use the unused allowance, or whether I just put in the money and it works itself out.

For NLUK, I have asked my accountants, but they won't offer financial advice.

[northernladuk]

Good Teapot! They will be able to provide clarity on what allowances you can use though can't they?

[Smartie]

Google

Google is your friend, here are a couple to start you off:
https://www.tax.service.gov.uk/paac
https://www.pensionsadvisoryservice..../carry-forward

[adubya]

For NLUK, I have asked my accountants, but they won't offer financial advice.

They must be able to tell you what you can legally do though.

[Fred Bloggs]

I asked the same questions myself from my SIPP provider. The answer is, there is nothing formal involved. You document it all yourself then file it away for a rainy day. For example - I took pdfs of my previous years of SIPP holdings and made a spreadsheet referencing the tax years and how much if any contributions I had made. I then showed a calculation each time I wanted to make a > GBP 40k contribution. For a couple of years running I put in GBP 80k and so far Bob is indeed by aunts husband. HTH.

[teapot418]

I asked the same questions myself from my SIPP provider. The answer is, there is nothing formal involved. You document it all yourself then file it away for a rainy day. For example - I took pdfs of my previous years of SIPP holdings and made a spreadsheet referencing the tax years and how much if any contributions I had made. I then showed a calculation each time I wanted to make a > GBP 40k contribution. For a couple of years running I put in GBP 80k and so far Bob is indeed by aunts husband. HTH.

Many thanks. My accountant commented that I could indeed carry forward the allowance, but could not advise on the process. Sounds like there isn't one, so that's nice and easy. I have much the same, so will do it this way. I understand you need to use the whole of 'this year's' allowance before you can use the carry forward.

[teapot418]

Google is your friend, here are a couple to start you off:
https://www.tax.service.gov.uk/paac
https://www.pensionsadvisoryservice..../carry-forward

Thanks - I'd seen the PAS site - my question was really around the process - I was unsure if there was a form I needed to fill out, but it sounds like it's all straightforward.

[teapot418]

Good Teapot! They will be able to provide clarity on what allowances you can use though can't they?

They must be able to tell you what you can legally do though.

Yes, they confirmed I could do it. But not the 'how' which Fred Bloggs has kindly answered.

[fidot]

So if I put in, say, £60K this year, that would be this year's allowance, and an unused 20K from three years ago.

My understanding is that you use up the most recent years first, so the 20K in the above scenario goes into last year's allowance. Only if that takes the amount over 40K for that year (i.e. if you already had £25K in there), would the extra go into the pot for 2 years back.

[teapot418]

My understanding is that you use up the most recent years first, so the 20K in the above scenario goes into last year's allowance. Only if that takes the amount over 40K for that year (i.e. if you already had £25K in there), would the extra go into the pot for 2 years back.

According to the pensions advisory service

"To use carry forward, you must make the maximum allowable contribution in the current tax year (£40,000 in 2016-17) and can then use unused annual allowances from the three previous tax years, starting with the tax year three years ago."

I'll double check with my SIPP provider.