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Where Taxpayers and Advisers Meet

Recycling rules

Oliver863
Posts:1
Joined:Mon Nov 02, 2015 2:25 pm
Recycling rules

Postby Oliver863 » Mon Nov 02, 2015 3:15 pm

I own a private limited company which has been making employer contributions to my SIPP for the last 2 years. I am thinking of increasing the contributions this year to a higher level.

Prior to that, I was part of a defined workplace pension scheme.

I am also 55 next January, so will then have the option of taking a lump sum from both pensions.

I am trying to work out how much I can contribute without becoming liable to any recycling penalties. I have read the HMRC guidance, but am unclear on a number of points:

1) How is the baseline amount decided for determining the cumulative increases over the 5 years which must be considered?
2) Are all amounts aggregated across all pensions for determining the contribution amounts?
3) If the amount declined from 2012/13 to 2014/14, does the cumulative amount decrease?
4) I understand the cumulative amount must be less than 30% of the PCLS amount. Would this PCLS amount be the total from both pensions?

Regards
Oliver

LozaACCS
Posts:1504
Joined:Wed Aug 06, 2008 3:55 pm

Re: Recycling rules

Postby LozaACCS » Wed Nov 04, 2015 10:01 am

It is difficult to give a precise answer because of the emphasis given in the rules to pre planned.
The base line is the normal or expected contribution adjusted for increases in RPI external factors like performance payments etc, this in my opinion makes the whole process subjective, for instance if the contribution were 10K in 13/14 and 15K in 14/15, what is the normal contribution.
Whatever this figure is is compared to the contributions in the rest of the tax year concerned and the following 2 tax years, and aggregated with contributions in the same tax year before the contribution and the 2 preceeding years, this cumulation gives the figure for the 30% test.
All amounts are aggregated
The test is applied to the total of the 2 PCLS


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