Carry forward SIPP help please!

[onesies]

I don't know what my allowance is for this, with carry forward. Can anyone help?

18/19 employed with a salary of about 45k.
19/20 stopped working in December 2019. Until then employed with a salary of about 45k.
20/21 haven't worked, aside from one month sub teaching April 2020.
21/22 haven't worked.

I'm a deferred member of the teachers pension scheme, so I'm still a member, just not paying contributions.

So have you made any contributions to a pension in the current tax year? Are you trying to work out what is the maximum you could put in now?

Exactly! Yes, thank you, that's what I'm trying to figure out

I've made a contribution of 10K this year. I wasn't aware of SIPP before this tax year so I'd like to use up the allowance from previous tax years if I can.

The amount you can carry forward will be the salary you received each year or £40k whichever is the higher. However you can only contribute up to the amount of relevant income (usually salary) you have in the tax year so if it’s nil this year you can’t contribute other than the minimum £2400 so you’ve already overcontributed

Even if I contributed nothing before this tax year?

There are two separate sets of rules that often get muddled with pensions. Pension annual allowance is the annual limit on the amount of contributions paid to, or accrued in, a pension scheme before the member has to pay tax. The AA rules operate separately from the tax relief rules, but you need to consider both when looking at pension saving.

You cannot carry forward unused tax relief, so you will only qualify for tax relief on part of your £10k SIPP contribution this year (£3600 as you have no net relevant earnings). You could still put in another £29,280 this year to use up all this year's AA, but you'd get no tax relief on it.

How much more are you looking at putting in? Without the benefit of tax relief being added it might not be your best option (if you have ISA allowance available?)

@onesies

Even if I contributed nothing before this tax year?

Yes. You could only get tax relief for contributing more if you had a higher salary this year

Thank you.

My SIPP pension provider is currently showing that I have the tax relief on this. But now I wonder if it's incorrect. Is there a way of knowing?

I suspect - though don't know - that your provider is assuming you have contributed within the limits of your earnings this year. At some point there is probably a process that will reconcile the tax relief with what you had available - but I've no idea how that works.

I would recommend you contact your pension provider next week to discuss it; they may be able to move some of your contributions to an ISA account instead, for example.

[Also - are you in a position to earn much in the next couple of months? That could increase what you'd be allowed to deposit in the SIPP with tax relief this year .... Probably pie in the sky territory I realise!]

@onesies

Thank you.

My SIPP pension provider is currently showing that I have the tax relief on this. But now I wonder if it's incorrect. Is there a way of knowing?

You have till end of tax year 5 April, r u likely to earn before then? The pension provider will have reclaimed basic rate tax so you’ll be liable to pay this back to hmrc if you have no earnings, I don’t know if this gets picked up automatically by hmrc for non tax return cases or if onus is on you to report it, check with pension provider

£2880 is how much you can contribute this tax year if provider is claiming relief at source, as that becomes £3600. When you pay in to a SIPP you acknowledge that you have relevant earnings to cover it. You don't have that relevant earnings this tax year, so at some point you will get a charge. If you won't be earning relevant earnings between now and 5th April, I would contact SIPP provider and tell them you have accidentally gone over annual allowance and see what they suggest.

Thank you.

Sorry to ask again but still don't understand something. If I earned and paid tax in the 2 tax years 2018-2020, why don't I have a carry forward allowance of 40k from each of these years?

I've already maxed out my ISA so not sure where else to put it. Have some other savings too that I was going to put in but maybe that's not the best thing to do...

You have to use up the whole of your current year's annual allowance first. Are you going to be adding another £29,280 contribution this year? Bearing in mind that it will not attract any tax relief, on account of you not having net relevant earnings of more than £3600.

Carry forward only comes into play after you have used up the whole of the current year's allowance. As I said before, annual allowance rules and tax relief rules are separate but easily muddled and there is already much confusion being posted.

Assuming you are making a contribution above £40k, then yes you look back to the 2018/19 tax year. You need to know what the total pension contributions made in that year were, and this will include employer contributions. It's got nothing to do with what your earnings were. If you were paying into an occupational scheme (Teachers Pension?) you need to find out what the Pension Input Amount (PIA) was for that year, which may be higher than you think. Deduct that figure from £40,000 and you will have the carry forward figure. If you are going to use up the whole of this with your new contribution then move on to 2019/20 to see what is available next.