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Post by bracknellboy on Feb 19, 2014 13:35:54 GMT
I could do a load of web research....or I could see if someone here already knows the answer.
Annual allowances reduce this year. I am on a salary sacrifice scheme (NI relief as well as IR relief @ source). If I chose to put more into my pension than my annual allowance, what happens ? Ovbiously I won't be eligible for tax relief on my contributions. How is that handled ?
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starfished
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Post by starfished on Feb 19, 2014 21:34:31 GMT
My understanding was that not only do you not get tax relief but a penal rate of tax is applied to the extra amount so it is unlikely to be in anyone's interest to do so.
However if you have not used up all of you allowance of the previous year you could use that as well, or did that go.
Also certain events are outside the annual allowance I believe. E.g redundancy contributions.
(not financial advisor, not advice, seek independent advice, etc)
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Post by bracknellboy on Feb 19, 2014 22:34:03 GMT
My understanding was that not only do you not get tax relief but a penal rate of tax is applied to the extra amount so it is unlikely to be in anyone's interest to do so. However if you have not used up all of you allowance of the previous year you could use that as well, or did that go. Also certain events are outside the annual allowance I believe. E.g redundancy contributions. (not financial advisor, not advice, seek independent advice, etc) Thanks. Not FA etc noted (and I'm ugly enough etc.). Now you mention it, I do recall something around penal rates applied (though I'm not sure whether that is annual allowance or LTA). I probably need to get onto the HMRC website. Previous year allowances utilised (at least as far back as I can go: a number of years before that not utilised: my bad).
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Post by mrclondon on Feb 19, 2014 22:37:39 GMT
The reduction from £50k pa to £40k pa is from 2014-15 tax year BUT the rules are of the "Alice in Wonderland" variety. Each pension scheme has a "Pension input period" which will not necessarily match the tax year. The final day of the pension input period determines the tax year that the contributions for that pension input period apply to. So you MAY find that some of your pension contributions this tax year actually count against next years reduced allowance.
For example in my case (I think) the company GPP scheme input period is 12th May - 11th May the next year hence contributions count against the 2nd tax year, whilst my SIPP (HL Vantage) is aligned to the tax year. Hence it makes more sense in my case to push extra funds into the SIPP this year rather than the GPP to give more head room next year. Its an utter nightmare.
As starfished said, a penal rate is applied to any extra, and don't forget the annual allowance includes company contributions as well as your own.
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Post by bracknellboy on Feb 19, 2014 22:45:53 GMT
The reduction from £50k pa to £40k pa is from 2014-15 tax year BUT the rules are of the "Alice in Wonderland" variety. Each pension scheme has a "Pension input period" which will not necessarily match the tax year. The final day of the pension input period determines the tax year that the contributions for that pension input period apply to. So you MAY find that some of your pension contributions this tax year actually count against next years reduced allowance. MRC: Many thanks. Yes you are correct of course. thankfully the input period on my scheme is aligned to HMRC tax year: this is a potential nightmare I've previously checked out and worked through.
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pikestaff
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Post by pikestaff on Feb 20, 2014 14:13:30 GMT
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Post by bracknellboy on Feb 23, 2014 8:39:07 GMT
Pikestaff: Many thanks. I have some decisions to make.
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