MPAA Limits and Prior Years' Unused Pensions Allowance.

[gvonge]

I'm due to retire in a couple of months and will not be receiving any salary. My income for the next few years is likely to be a DB pension plus State pension with any shortfall made up by drawing on what is currently a fairly large cash sum arising from my parents' estate.

Although I will not be earning, am I still able to make use of unused pensions allowance from previous years in order to put part of this cash into a SIPP?

[kempiejon]

I'm due to retire in a couple of months and will not be receiving any salary. My income for the next few years is likely to be a DB pension plus State pension with any shortfall made up by drawing on what is currently a fairly large cash sum arising from my parents' estate.

Although I will not be earning, am I still able to make use of unused pensions allowance from previous years in order to put part of this cash into a SIPP?

If only, but no, I don't think so. Do you mean in this year or future years? Relevant earnings
https://www.gov.uk/hmrc-internal-manual ... 0#earnings

For most people the amount of tax relief they can have on their pension contributions is limited to 100% of their relevant UK earnings that are chargeable to income tax for the tax year...employment income, such as: pay, wages, bonus, overtime, or commission - but only if taxable under Section 7(2) Income Tax ....
For the avoidance of doubt a pension is not classed as earnings and cannot be included in the definition of relevant UK earnings.

I think you have a month to make sure you have contributed the lower of your max earning for this year or the limit of £60k into a SIPP, allowing for tax relief and other previously pension entitlement.

Then I found this

PTM043000 gives more information on the methods of granting tax relief.

Unused tax relief can no longer be carried backwards or forwards to other tax years.

Irrelevant in my circumstances but seems to contradict my working model. I'm not inclined to dig deeper into HMRCs tax manual. I'm hedging my working/contribution bets by avoiding triggering the MPAA even though I'm probably not going back to employment

[ursaminortaur]

I'm due to retire in a couple of months and will not be receiving any salary. My income for the next few years is likely to be a DB pension plus State pension with any shortfall made up by drawing on what is currently a fairly large cash sum arising from my parents' estate.

Although I will not be earning, am I still able to make use of unused pensions allowance from previous years in order to put part of this cash into a SIPP?

If only, but no, I don't think so. Do you mean in this year or future years? Relevant earnings
https://www.gov.uk/hmrc-internal-manual ... 0#earnings

For most people the amount of tax relief they can have on their pension contributions is limited to 100% of their relevant UK earnings that are chargeable to income tax for the tax year...employment income, such as: pay, wages, bonus, overtime, or commission - but only if taxable under Section 7(2) Income Tax ....
For the avoidance of doubt a pension is not classed as earnings and cannot be included in the definition of relevant UK earnings.

I think you have a month to make sure you have contributed the lower of your max earning for this year or the limit of £60k into a SIPP, allowing for tax relief and other previously pension entitlement.

Then I found this

PTM043000 gives more information on the methods of granting tax relief.

Unused tax relief can no longer be carried backwards or forwards to other tax years.

Irrelevant in my circumstances but seems to contradict my working model. I'm not inclined to dig deeper into HMRCs tax manual. I'm hedging my working/contribution bets by avoiding triggering the MPAA even though I'm probably not going back to employment

Carry back was abolished ages ago and the way that carry forward works means that in order to make use of previous years allowances you first need to use up the current year's allowance which means your relevant earnings in the year you make the contribution has to be more than that year's annual allowance.