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Where Taxpayers and Advisers Meet

Checking we're not digging a pension recycling hole

Addlepate
Posts:1
Joined:Fri Feb 13, 2026 8:51 am
Checking we're not digging a pension recycling hole

Postby Addlepate » Fri Feb 13, 2026 3:57 pm

Hello. I'm looking for confirmation on pension recycling rules. I don't think we are recycling, but I'm not confident of my assessment.

Partner took partial retirement last year on her NHS DB scheme, because it was use it or lose it. However, it does mean she's getting the money earlier than she might have wished, and it's put her into the higher rate tax bracket. To effectively defer the money and reduce the tax she wants to make additional contributions either via her current DB scheme, employer's AVC scheme or SIPP.

When she took the pension she received a tax free lump sum which was compulsory; it wasn't part of her planning and it's gone into a pot for a potential house move / purchase. In considering additional pension payments she is thinking of either a lump sum from accumulated salary (this year), or salary sacrifice (next year).

A couple of people have alerted us to pension recycling rules, and I've read through the information on the HMRC site and various others. The amounts are large enough to be over the £7500 / 30% limits, but we have never intended to use the lump sum or equivalent, the additional payments are not because of the lump sum, and we would have made the additional payments regardless of whether she took a tax free lump sum or not.

As far as I can see this fails the tests for recycling; I'd just like to get my thinking confirmed! Thanks

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