Pension Sanity Check

[Fred Bloggs]

It might be worth adding when you did this.

The last time was 2016.

[Contreras]

If I contributed £20k in Year 4 and Year 3 when I was employed at a company and then contributed £40k via my contracting limited company in Year 2 and Year 1 that would (in general) mean I could still make a personal contribution of another £40k and still get tax relief?

Yes. Obviously there may be caveats relating to specific circumstances, but generally - yes.

Carry forward allows you to make use of any annual allowance that you may not have used during the three previous tax years, provided that you were a member of a registered pension scheme.

To use carry forward, you must make the maximum allowable contribution in the current tax year (£40,000 in 2020/21) and can then use unused annual allowances from the three previous tax years, starting with the tax year three years ago.

Source: Carry Forward Annual Allowance

There is also a limitation that if pension contribution is from ltd, then, need to set up for employer contribution scheme.

Not quite. The pension scheme must allow employer contributions (that may be what you meant though). But generally there's no special "setup", it's just a matter of informing the pension co. on a per-contribution basis what type of contribution it is and of course it must be paid direct from your co. Fwiw, my SIPP provider specifically do not advertise this, you have to ask and they supply instructions for one-off company contributions (apparently offering the option confuses people and causes the pension co admin grief sorting it out).

1. If I set up pension scheme for ltd to contribute to now (half year in the way), do I still have 40k allowance?

Yes.

2. In the above situation, I do not have any carry forward any allowance right? As I only have personal pension schemes with ex-employers, but none of them can do employer contribution I think...

Maybe - see bolded text in the quote above. It says "a registered pension". I would give them a call. Also speak to the scheme providers. They can sometimes offer decent technical advice (that is, without getting into investment advice), unlike investment advisors who will say anything goes, IME!

both the ipse tax people and my own accountant said it was not possible to make a pension payment unless turnover justified it.

Then they are both wrong, or there was a misunderstanding. The company can make pension contributions in excess of turnover for that year. That is assuming there is retained profit to do this. Also that you are the sole employee and fee earner for the company, i.e. all profit is/was of your making. In effect the company makes a loss for that year, which you can then claim a CT refund on earlier years. CT rules on carry back apply. I've done this as late as 2019.

It should go without saying that all this is subject to specific circumstances.