Hello all,
A question/clarification on private pension contributions and carrying forward unused allowance from previous years.
I have skim read the boards going back a year-ish and didn't see this come up - happy to be pointed to a previous thread if I missed it.
Background:
I have a SIPP. Small value - no where near lifetime limit.
Age - no where near state retirement.
No pension contributions since 2013 - either private or from work.
This year it is likely I will have taxable income substantially into higher rate - so much so that if I want to get myself back down to basic rate, I would need to shift more than the 40k annual limit. To make the numbers easier to work with, I will use 50k as the amount I want to shift.
I believe I can do so by making use of previous years unused allowances (up to 3 years).
The question is:
Can I decide which years I use for the whole sum or am I forced to use this years 40k first?
I.e. I think the rules are:
2015-16 = 10k
2016-17 = 0
2017-18 = 0
2018-19 = 40k
Because this income might be going on for a few years, I would like to be able to allocate it:
2015-16 = 40k
2016-17 = 10k
2017-18 = 0
2018-19 = 0
Thus leaving 2018-19 allowance for use in future years.
Regards,
Fluffy.
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Carrying fwd unused allowance.
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Re: Carrying fwd unused allowance.
It's my understanding that the "order of use" is current tax year (CY), then you use CY-3, CY-2, CY-1 and until you run out of allowance, or your payment is covered.
Using your £50k example, you can pay in over the annual allowance for 3 years before you run out of carried forward allowance
2018/19: Use £40k from 2018/19+£10k unused allowance from 2015/16
2019/20: Use £40k from 2019/20+£10k unused allowance from 2016/17
2020/21: Use £40k from 2020/21+£10k unused allowance from 2017/18
2021/22: Use £40k from 2021/22 only, (nothing to carry forward from 2018/19)
Using your £50k example, you can pay in over the annual allowance for 3 years before you run out of carried forward allowance
2018/19: Use £40k from 2018/19+£10k unused allowance from 2015/16
2019/20: Use £40k from 2019/20+£10k unused allowance from 2016/17
2020/21: Use £40k from 2020/21+£10k unused allowance from 2017/18
2021/22: Use £40k from 2021/22 only, (nothing to carry forward from 2018/19)
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