Unused pension contributions

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GreenLantern22 replied

1 April 2023, 08:13
Originally posted by northernladuk View Post

Just checking but you have to have been a member of the scheme in the previous years to do this. Can't just open one and backdate.

Yes that's correct. The scheme, pension SIPP in this case, would be open from before year 1.
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northernladuk replied

31 March 2023, 18:55
Just checking but you have to have been a member of the scheme in the previous years to do this. Can't just open one and backdate.
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GreenLantern22 started a topic Unused pension contributions

31 March 2023, 18:15
Unused pension contributions

Can you use unused pension contributions to reduce the amount of tax you pay over two or three years? For instance in year 1 gross income is £180k and you pay no pension contributions. On year 2 gross income is again £180k and you pay the max allowed pension contributions, which is £80k, £40k for year 2 and £40k carry over from year 1. Wouldn't your total tax paid in years 1 and 2 be less than spliting the pension contributions among the two years?

Paying £40k in year 1 and 2 means your gross income becames £140k so you end up paying 60% tax on the £100-125k on both years. But if you pay £80k in the second year your gross income for that year becames £100k so avoid paying 60% tax on the £100-125k for year 2. So by my calculations you will save 20% over £25k which is £5k. Am I missing something here?
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