Pension Carry Forward

[Fred Bloggs]

Someone over 50 dumping all their money into their pension makes sense but not for someone younger.

Very important to realise you put a LOT less in by starting sooner. I started my kids off with small SIPP contributions when they were babies. That first few quid will be invested for close on 70 years before it gets drawn on.

[IR35 Avoider]

To join the others who've gone off-topic, I've no regrets about dumping 400K into my pension, mostly during my fourties.

I had roughly 40% tax relief on the way in, and will probably pay on average less than 15% tax on the way out.

If I hadn't made the contributions, what was left of the money after HMRCs share would have been invested in exactly the same way. In other words, the contributions made no difference to my spending at the time, only a favourable one to my current investment balance.

Another advantage of my contributions was that while working only intermittently/part-time, I was able to earn up to 100K in a tax year, pay no tax, and have zero exposure to an IR35 challenge.

[IR35 Avoider]

Not sure why you accountant thinks making a loss is an issue. Suggest you don't tie yourself in knots over something that shouldn't be a constraint.

I have made (small) losses twice in the past five years as a result of pension contributions. Not sure why HMRC would care which company tax-year you make you contributions in as you get the same amount of tax-relief either way. (The only exception would be if your company is wound-up with unused losses, which works in their favour, a situation I was potentially in danger of, and which I solved by deliberately creating losses that could be carried back and set against previous years profits.)

I don't understand the question you are asking, but essentially, always try to minimise your profits/maximise your losses by making contributions in the earliest possible tax year. It's easy to carry losses forward, but you can only carry them back one year, so if more than a year passes since making a profit you can never reduce that profit with a pension payment. (Actually the advice of making contributions as early as possible works to optimise both your company situation tax and the use of you pension annual contribution limits.)

[SueEllen]

Oh god, I didn't want an answer. That means I'd have to prove I know sod all again..........

Someone over 50 dumping all their money into their pension makes sense but not for someone younger.

[northernladuk]

Other questions which will help you answer NLUK:
1. How old are you?
2. What other investments do you have?

Oh god, I didn't want an answer. That means I'd have to prove I know sod all again..........

[SueEllen]

Other questions which will help you answer NLUK:
1. How old are you?
2. What other investments do you have?

[northernladuk]

Where is your warchest?

Are you diversifying your investments in case pensions bomb or get attacked by Govt?

Are you just throwing money at pensions because you've been told it's most efficient and will end up the richest person in the graveyard whilst living day to day like a pauper...

You post doesn't sound like you are undertaking a reasoned and balance approach to your investments.........

[LimitedMan]

Hi had question regarding pension carry forward regarding profits in year carry forward from. My accountant recommends not to make a loss in a company year and have been sticking to that whilst making largest pension contribution I can each year. In a position this year to potentially carry forward some previous years missed contributions but have a query regarding making a loss in the year carrying forward from. Probably best asked with an example :

Current tax year 15/16 30,000 contribution which was max could made without making loss in company year (y/e 31st July)
Next tax year 16/17 planning 40,000 contribution but have some profit left over this company year

In the next tax year 16/17 could I carry forward 10,000 of unused allowance from 15/16 even though had I made that contribution in that tax year would have made a loss ?

The extra 10,000 wouldn't cause me to make a loss in the next company year (I hope !).

As you can see bit confused, this might be whole point of the carry forward rule but wanted to make sure was the case.

Did anything change this in the budget yesterday ?

Cheers,

LimitedMan