Hi, hope someone can help with my query regarding tax relief on "carried forward" pension contributions.
Have tried calling HMRC but they will only provide "general" advice and refer me to various HMRC documents. Similarly, have spoken to a couple of SIPP providers who aren't able to answer my questions re tax relief and refer me to HMRC!
If anyone can point me to a comprehensive guide on the subject I would be very grateful.
Scenario is as follows:
1) I have a company (DC) pension and will contribute c. 20K this tax year (2014/15), including employer contributions.
2) I want to open a SIPP and contribute c. 50K (before tax relief) in the current tax year, both to "top up" my contributions to £40K in the current tax year and also use "carry forward" of previous years pension contributions for the balance.
3) Having used the HMRC carry forward calculator, I have "available contributions" of c. £96K for this and the 3 previous tax years - I assume that this is "gross of tax relief" (ie I would contribute substantially less than this sum which, when basic rate and higher rate tax relief is added, would equate to £96K).
4) One SIPP provider I spoke to said that, when paying in a lump sum of over £40K, tax relief at the basic rate would only be given on a maximum of £40K (ie the maximum contributions for 2014/15) - and that takes no account of contributions to my company pension scheme, which I assume should be deducted when calculating tax relief on my SIPP contributions??? The same SIPP provider could not explain to me how I would claim (basic and higher rate) tax relief on the "balance" when using "carry forward"
So my question is this: Given the above scenario, how do I ensure that I get full tax relief, at my top rate, when paying in £50K to a SIPP, covering both current and previous year's contributions?
I know that, under normal circumstances (ie for contributions of less than the maximum allowable), basic rate tax relief is added by the SIPP provider when contributions are made and that higher rate relief is claimed through self-assessment - but this does not cater for contributions in excess of the annual allowance, as in the above scenario.
Thanks for any help that you can provide, George
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