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Tax Return query when using Carry Forward to exceed the Pension Annual Allowance

Practical Issues
jlend
Posts: 6
Joined: February 23rd, 2021, 8:51 pm

Tax Return query when using Carry Forward to exceed the Pension Annual Allowance

#389485

Postby jlend » February 24th, 2021, 11:34 am

I've found myself in the fortunate position this year that I can over pay the Annual Allowance using the Carry Forward option. I've satisfied myself that I understand the rules and the calculations. What I cannot find any useful information about is how I report this when I come fill in my tax return. The only information I could find on this subject came from an FT article which I'm afraid I'm not allowed to post the link to but it just stated:

Simply fill in the section on your tax return showing how much you are contributing to your pension this year and state you do not have an annual allowance tax charge. “From this [HMRC] will infer that you’re using carry forward and will do their own calculations to check you’re still within the allowance,”


If as an example I was able to contribute £60k this year, would I enter £60k into the 1. 'Payments to registered pension schemes where basic rate tax relief …' and then state in an additional information box 'I do not have an annual allowance tax charge'?

From the FT article, I do not know how HMRC could do their own calculations because they do not know my employers contributions or should I also include the relevant years as additional information?

This possibly seems like an odd question but I'd like to be confident I know how I report this before I pull the trigger and make the contribution.

Thanks,

J

bluedonkey
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Re: Tax Return query when using Carry Forward to exceed the Pension Annual Allowance

#389498

Postby bluedonkey » February 24th, 2021, 12:15 pm

I think the FT article should say "HMRC may do their own calculations", not "will".

DrBunsenHoneydew
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Re: Tax Return query when using Carry Forward to exceed the Pension Annual Allowance

#389560

Postby DrBunsenHoneydew » February 24th, 2021, 2:42 pm

jlend wrote:I've found myself in the fortunate position this year that I can over pay the Annual Allowance using the Carry Forward option. I've satisfied myself that I understand the rules and the calculations. What I cannot find any useful information about is how I report this when I come fill in my tax return. The only information I could find on this subject came from an FT article which I'm afraid I'm not allowed to post the link to but it just stated:

Simply fill in the section on your tax return showing how much you are contributing to your pension this year and state you do not have an annual allowance tax charge. “From this [HMRC] will infer that you’re using carry forward and will do their own calculations to check you’re still within the allowance,”


If as an example I was able to contribute £60k this year, would I enter £60k into the 1. 'Payments to registered pension schemes where basic rate tax relief …' and then state in an additional information box 'I do not have an annual allowance tax charge'?

From the FT article, I do not know how HMRC could do their own calculations because they do not know my employers contributions or should I also include the relevant years as additional information?

This possibly seems like an odd question but I'd like to be confident I know how I report this before I pull the trigger and make the contribution.

Thanks,

J

That will be correct if the £60k is the gross figure including the tax relief and you actually paid in £48k net, and got no relief in payroll.

ursaminortaur
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Re: Tax Return query when using Carry Forward to exceed the Pension Annual Allowance

#389780

Postby ursaminortaur » February 24th, 2021, 10:24 pm

jlend wrote:I've found myself in the fortunate position this year that I can over pay the Annual Allowance using the Carry Forward option. I've satisfied myself that I understand the rules and the calculations. What I cannot find any useful information about is how I report this when I come fill in my tax return. The only information I could find on this subject came from an FT article which I'm afraid I'm not allowed to post the link to but it just stated:

Simply fill in the section on your tax return showing how much you are contributing to your pension this year and state you do not have an annual allowance tax charge. “From this [HMRC] will infer that you’re using carry forward and will do their own calculations to check you’re still within the allowance,”


If as an example I was able to contribute £60k this year, would I enter £60k into the 1. 'Payments to registered pension schemes where basic rate tax relief …' and then state in an additional information box 'I do not have an annual allowance tax charge'?

From the FT article, I do not know how HMRC could do their own calculations because they do not know my employers contributions or should I also include the relevant years as additional information?

This possibly seems like an odd question but I'd like to be confident I know how I report this before I pull the trigger and make the contribution.

Thanks,

J


They should know your employer's contributions as the employer is required to report them.

https://www.gov.uk/guidance/what-payroll-information-to-report-to-hmrc#pay-and-deductions

Pension deductions




You don't need to specify which years as the carry-forward only concerns the previous three years and HMRC will work forward from the earliest of those years.

DrBunsenHoneydew
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Re: Tax Return query when using Carry Forward to exceed the Pension Annual Allowance

#389982

Postby DrBunsenHoneydew » February 25th, 2021, 3:11 pm

ursaminortaur wrote:
jlend wrote:I've found myself in the fortunate position this year that I can over pay the Annual Allowance using the Carry Forward option. I've satisfied myself that I understand the rules and the calculations. What I cannot find any useful information about is how I report this when I come fill in my tax return. The only information I could find on this subject came from an FT article which I'm afraid I'm not allowed to post the link to but it just stated:

Simply fill in the section on your tax return showing how much you are contributing to your pension this year and state you do not have an annual allowance tax charge. “From this [HMRC] will infer that you’re using carry forward and will do their own calculations to check you’re still within the allowance,”


If as an example I was able to contribute £60k this year, would I enter £60k into the 1. 'Payments to registered pension schemes where basic rate tax relief …' and then state in an additional information box 'I do not have an annual allowance tax charge'?

From the FT article, I do not know how HMRC could do their own calculations because they do not know my employers contributions or should I also include the relevant years as additional information?

This possibly seems like an odd question but I'd like to be confident I know how I report this before I pull the trigger and make the contribution.

Thanks,

J


They should know your employer's contributions as the employer is required to report them.

https://www.gov.uk/guidance/what-payroll-information-to-report-to-hmrc#pay-and-deductions

Pension deductions




You don't need to specify which years as the carry-forward only concerns the previous three years and HMRC will work forward from the earliest of those years.

That table doesn't mention the employer's contributions to your pension though.

ursaminortaur
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Re: Tax Return query when using Carry Forward to exceed the Pension Annual Allowance

#390016

Postby ursaminortaur » February 25th, 2021, 5:19 pm

DrBunsenHoneydew wrote:
ursaminortaur wrote:
jlend wrote:I've found myself in the fortunate position this year that I can over pay the Annual Allowance using the Carry Forward option. I've satisfied myself that I understand the rules and the calculations. What I cannot find any useful information about is how I report this when I come fill in my tax return. The only information I could find on this subject came from an FT article which I'm afraid I'm not allowed to post the link to but it just stated:



If as an example I was able to contribute £60k this year, would I enter £60k into the 1. 'Payments to registered pension schemes where basic rate tax relief …' and then state in an additional information box 'I do not have an annual allowance tax charge'?

From the FT article, I do not know how HMRC could do their own calculations because they do not know my employers contributions or should I also include the relevant years as additional information?

This possibly seems like an odd question but I'd like to be confident I know how I report this before I pull the trigger and make the contribution.

Thanks,

J


They should know your employer's contributions as the employer is required to report them.

https://www.gov.uk/guidance/what-payroll-information-to-report-to-hmrc#pay-and-deductions

Pension deductions




You don't need to specify which years as the carry-forward only concerns the previous three years and HMRC will work forward from the earliest of those years.

That table doesn't mention the employer's contributions to your pension though.


No, I'm pretty sure those are the total contributions per employee paid into the employer's scheme ie employee + employer contributions into the occupational scheme.

jlend
Posts: 6
Joined: February 23rd, 2021, 8:51 pm

Re: Tax Return query when using Carry Forward to exceed the Pension Annual Allowance

#390718

Postby jlend » February 27th, 2021, 8:28 pm

Thanks guys. I’ll take advantage of this while I still can, who know what next weeks budget will bring for future years???


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