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Backdated Contributions

JonnyT
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Backdated Contributions

#381826

Postby JonnyT » January 29th, 2021, 10:27 am

My wife is a none Tax Payer and last year I opened a SIPP for her and contributed £2880 to get the maximum tax relief.

What I'm unsure about is can I add more monies and have this backdated?

swill453
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Re: Backdated Contributions

#381832

Postby swill453 » January 29th, 2021, 10:44 am

JonnyT wrote:My wife is a none Tax Payer and last year I opened a SIPP for her and contributed £2880 to get the maximum tax relief.

What I'm unsure about is can I add more monies and have this backdated?

If she has no earnings this year then no, she can't use the allowance from previous years.

If she has some earnings but below the personal allowance then I'm not completely sure.

Scott.

bluedonkey
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Re: Backdated Contributions

#381848

Postby bluedonkey » January 29th, 2021, 11:44 am

JonnyT wrote:My wife is a none Tax Payer and last year I opened a SIPP for her and contributed £2880 to get the maximum tax relief.

What I'm unsure about is can I add more monies and have this backdated?

Pension contributions can't be backdated. They fall into the tax year in which they are made.

swill453
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Re: Backdated Contributions

#381859

Postby swill453 » January 29th, 2021, 11:59 am

bluedonkey wrote:Pension contributions can't be backdated. They fall into the tax year in which they are made.

Allowances, however, can be carried forward in certain circumstances, as long as you have earnings this year to cover them.

(But I think the answer to the OP is still no. If his wife had any earnings above £3600 this year then presumably she'd have put them in the pension anyway.)

Scott.

JonnyT
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Re: Backdated Contributions

#381897

Postby JonnyT » January 29th, 2021, 1:11 pm

Thanks everyone. It was worth a try :)

ursaminortaur
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Re: Backdated Contributions

#381921

Postby ursaminortaur » January 29th, 2021, 2:01 pm

swill453 wrote:
bluedonkey wrote:Pension contributions can't be backdated. They fall into the tax year in which they are made.

Allowances, however, can be carried forward in certain circumstances, as long as you have earnings this year to cover them.

(But I think the answer to the OP is still no. If his wife had any earnings above £3600 this year then presumably she'd have put them in the pension anyway.)

Scott.


Even if your wife had earnings above £3600 then she would only be able to carry-forward the allowances from the last three years and get tax-relief if

1) She was in a pension scheme in those years (even if she had actually contributed nothing to it in those years) and had unused allowance available from those years.
and
2) She had enough earnings this year to both cover the carried-forward allowance that she wished to use and to fully use up this year's annual allowance first. That means she would have to have earnings in excess of £40,000 this year.
and
3) She had not gone into drawdown with another pension and taken anything more than the tax free lump sum. Once that had been done a reduced MPAA limit of £4000 applies to any further contributions to a money purchase pension scheme and carry forward can no longer be utilised.

https://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/pensions-and-tax/carry-forward

Carry forward allows you to make use of any annual allowance that you may not have used during the three previous tax years, provided that you were a member of a registered pension scheme. You can use carry forward if you’re an active member currently building up pension benefits, a deferred member with paid-up pension benefits, a pensioner member in receipt of pension benefits from your pension scheme or a pension credit member where you have a share of your ex-partner’s pension.
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To use carry forward, you must make the maximum allowable contribution in the current tax year (£40,000 in 2020/21) and can then use unused annual allowances from the three previous tax years, starting with the tax year three years ago.

You can’t receive tax relief on contributions in excess of your earnings in a tax year and you only receive higher rate tax relief to the extent that you have paid it.

If a particular tax year’s unused annual allowance is not fully used, it can only be carried forward for up to three years, after which it is lost.

If you are using carry forward to make larger pension contributions, you will only receive tax relief on total contributions that you pay into your pension scheme(s) that do not exceed your earnings in the tax year that you pay them.
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Where an individual is subject to the MPAA and they want to pay more than £4,000 into their money purchase pension scheme, they cannot carry forward any unused annual allowances from the three previous tax years.


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