Carry forward pension allowance

[Mrs Pingu]

Yearly pension contribution allowance is £40,000, but you can contribute more than that if you haven't used the full allowance from any of the 3 previous tax years. I get that bit.

If you want to use this carry forward allowance am I right in thinking I don't need to do anything official, just make sure I don't use too much and prepare to justify if HMRC come asking? (I do not do a tax return BTW).

[Adam]

Yes, no paperwork required.  Although bear in mind the total you pay in (including any employer's contribution) can't exceed your gross earnings in the current tax year.

[Mrs Pingu]

Thanks guv 

[Frank9755]

Yes, no paperwork required.  Although bear in mind the total you pay in (including any employer's contribution) can't exceed your gross earnings in the current tax year.

I know this is your area, Adam, but is the bit about employer contributions not being able to exceed gross earnings right? I thought employer contributions are not limited by level of employee earnings.

[Adam]

Yes, no paperwork required.  Although bear in mind the total you pay in (including any employer's contribution) can't exceed your gross earnings in the current tax year.

I know this is your area, Adam, but is the bit about employer contributions not being able to exceed gross earnings right? I thought employer contributions are not limited by level of employee earnings.

Hasn't been my area for just over 2 years, so things may have gone a bit rusty!

Whilst the employer contributions aren't limited by the amount of employee earnings (although HMRC would query £1 million contribution if the employee earned say only £5,000!), the annual allowance limit of £40,000 for tax relief does include employer's contribution. 

https://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/pensions-and-tax/the-annual-allowance

To use the carry forward allowance of any unused limits in the last 3 years, you first have to use up the maximum allowance in the current tax year, but there's still the restriction that overall, the amount paid can't exceed your gross earning in the current tax year.  This is because the overall accumulated total is described by HMRC as your revised annual allowance for this tax year, so you're still caught by the income limitation.

https://www.pensionbee.com/pensions-explained/pension-contributions/pension-carry-forward-rule

[NHRC Chris]

You just need to keep evidence but speak to a professional (Adviser/Accountant) to make sure you get it right.

You need to pay this year’s £40,000 before you can carry forward and you can only pay 100% of earnings so you need to earn at least £40,000 this year before you can do anything. (I believe)