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?
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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