Contribute over £40k pension???

[Joey2412]

Hi, I would really appreciate if someone would able to help my brain work out the following.

Husband has been given double bonus this year ( company brought forward a share bonus that wasn't supposed to be released yet) which means he will earn over £100k

So we have looked at upping pension contributions to reduce taxable income to below 100k

However we have already made a sizeable pension contributoon
already this year before we knew about the double bonus amounts, which will now probably put us at over £40k pension contribution allowance.

so my questions are

1. what happens when we put over £40k pension. If we do pay over £40k does this still mean our taxable income will be below £100k or do they count it as taxable income over £40k?
2. I understand you can back date pension contributions to previous years. Who do we contact for this? And again will this effect the £100k taxable income??

My brain hurts just thinking and worrying about it all. One reason we really need to be below 100k is that we cleaned 30 feee hours childcare for April-June time and I'm worried this is going to cause big problems. I know it seems like a nice problem to have but we have a huge mortgage and outgoings and I just want to do everything correct

Think it’s a question for an accountant - call one up for free advice or pay for a session it’s quite a specialist questions based on your personal situation

You need to calculate if you have unused annual allowance from the previous 3 years, it sounds like it is likely he will have sufficient carry forward to cover.

Find out what his pension input amount (PIA) was for the previous 2 tax years and see if it was below the £40k annual allowance. If the amount of leftover allowance is enough to cover the amount over £40k he will be this year - it is fine and you don't need to do anything.

There is a calculator on gov.uk but it is quite complicated (to allow for all the variables) so I would check offline first.

Sorry, it is THREE years you can cfwd.

www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/carry-forward#:~:text=Carry%20forward%20allows%20you%20to%20make%20use%20of%20any%20annual,that%20need%20to%20be%20met.

Thank you that's really helpful. So even if we backdated pension contributions ( I'm sure we have plenty left from previous years) those contributions will not count towards our taxable pay for this year?

Yes we were thinking about a financial advisor- or would it be an accountant we need. Haven't been in a position before to need to use one

It's not that you backdate the pension contributions, don't think of it like that.

It's that you are limited to tax relief on £40kpa pension contributions. You can make more if you like.

It's the tax treatment of contributions over £40k that changes but you don't need to worry if you haven't used up all your allowance in previous years.

Do a little spreadsheet showing the amount of pension contribution in the year, how much AA remains each year and the cfwd balance of AA. Then see how much exceeding by this year and if you have enough cfwd AA to cover.
If yes, do nothing!