pension carry forward - tax relief

[GW]

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

[LozaACCS]

I have not used the calculator, (I did not know there was one), that said;
In 14/15 your carry forward is 150K (3 * 50K), you add the AA for 14/15 (40K) to give a total of 190K, this obviously is subject to the contribution(s) not exceeding 100% of net relevant earnings.

So for each year (11/12 12/13 13/14 14/15)
Work out the amount paid directly by you.(say 24K)
Gross this up by 100/80. (ie 30K)
Add to this figure the amount paid by the ER(these are gross contributions) (say 10K)
Your AA is 50K for the first three years and the gross contribution is 40K, so you carry forward 10K each year giving you 30K to use in 14/15.
Your AA is 40K in 14/15 so in total for that year you have 70K
So if the employer contributed 10K in the year you could write a cheque for 48K and not exceed the AA

[GW]

Loza,

thanks for response to my post - very helpful. I understand your figures.

My real question concerns claiming tax relief - SIPP provider says they can only give basic rate tax relief on contributions of £40K or less (and this takes no account of company contributions on which FULL tax relief has already been given via payroll - so I assume tax relief given by SIPP provider would be significantly LESS than £40K).

Self Assessment tax return will, presumably, only enable me to claim higher rate relief (as HMRC will doubtless assume that basic rate tax relief has already been given by SIPP provider), so how do I claim for basic rate tax relief in excess of the £40K referred to above when using carry forward? There appears to be no "box" on the Self Assessment return in which I can enter these figures - and in particular to tell HMRC that basic rate tax relief has NOT been given on some contributions.

Any advice you can give would be appreciated.

Incidentally, HMRC "carry forward" calculators can be found here:

http://www.hmrc.gov.uk/tools/pension-allowance/

Thanks, George