Any experts on redundancy payments into pension?

[Confusedaboutpensions]

I’m hoping someone can offer some guidance based on their experience/area of expertise.

i am a high earner but have never used all of my pension allowance or earned above the income threshold for tapered allowance.

However, this tax year I am being made redundant and the combination of a high salary, good bonus, redundancy payment and salary for my new role will mean I will likely reduce my pension allowance to the minimum £10k for 25/26 tax year.

i am hoping to use some of my redundancy payment towards my pension, using my unused pension allowance from previous years. I have checked unused allowance and there is enough available to cover.

My questions -
Based on guidance, I submit a self assessment but I don’t need to notify HMRC I am using prior allowances - is this correct? I’ll keep a full record in case requested.
Does my employer (current or future) make any tax adjustment in their payments to my pension or is it just left to my self assessment? Just wanted to make sure I didn’t need to make any claim for tax relief.

Thanks in advance!

I can answer your first question but I’m not sure I follow the 2nd. Yes you don’t need to notify HMRC that you’re using prior year allowances but keep a careful record. Pensionwise is a good resource to call if you want advice on this.

On the second q, I think you’re asking how you make sure that you aren’t overpaying and stay under the lower allowance. Most employers offer an alternative for those at risk of exceeding the limit, usually an alternative cash amount, and only pay the lower threshold to you. This is because otherwise you get quite the bill in tax assessment. Some companies are active in this and take care of it, others expect you to indicate the payment you want. Your challenge will be if this is a one off event where you’ve exceeded the threshold, you need to let your new new employer know as they will otherwise blindly use the full normal allowance.

The tapered pension rules are a total pain.

Thank you @Savoury for responding, you’ve been really helpful.

Apologies I realise my 2nd question wasn’t very clear, I was trying to avoid mentioning numbers because I know I’m in an unusual/privileged position, particularly this year.

My redundancy payment will be c.£180k, I’m aiming for £100k into my pension so I wondered if my employer would take some form of action on tax given the sum very clearly exceeds this year’s pension allowance, even without tapering, or if they will just base this on me taking care of any tax position.

I guess I can ask them that directly though as I’m not seeking any advice for them (which I know they can’t provide).

Thank you again. You’ve been super helpful.

I did this once (not with a redundancy payout), and I just got an automated letter from the pension company about the allowance but the payments went through with no tax taken by my employer. But it may well depend on the company so I’d recommend talking to them if possible.

Great advice, thank you @AirborneElephant