Pension Contribution allowance

Client earning above 100k pa. Use of £40k allowance for previous years

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2015/16 to 2018/19 returns not yet submitted. Can the 40k allowance be carried back to reduce tax?

Replies (4)

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By Jholm
27th Aug 2019 14:52

No, forward.

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By gainsborough
27th Aug 2019 15:00

As above. You use current year AA first then previous 3 years unused on a FIFO basis provided individual was a member of a registered pension scheme in those years.

Also watch out for tapered AA rules that came in April 2016.

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By b_udayshankar
27th Aug 2019 15:02

Then is it better to use salary sacrifice (ss) or to use ss + AVC's into an approved pension scheme? The company has set a lower limit of national minimum wage as a floor. Client has savings and can go down to this level.

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By Matrix
27th Aug 2019 17:32

The £40k allowance does not need to be claimed so the fact that the tax returns have not been submitted is irrelevant.

You will need to do detailed calculations and it will depend whether the client earns over £110k and you need to know the employee and employer contributions. If they were subject to the taper since the new rules came in then there may be no unused allowance brought forward.

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