HMRC have created new guidance on how the carry forward for the deemed annual allowance works from 2008/09 onward.
Following the reduction in the pensions annual allowance there are transitional carry forward rules which bring a deemed allowance into account from 2008/09.
For example:
Maya contributes £100,000 to her pension scheme in 2011/12 she has made contributions in the previous three years as follows:
|
Year |
Contribution |
Deemed annual allowance |
Unused/(excess) |
Unused allowance c/fwd |
|
2008/09 |
40,000 |
50,000 |
10,000 |
10,000 |
|
2009/10 |
60,000 |
50,000 |
- |
10,000 |
|
2010/11 |
30,000 |
50,000 |
20,000 |
30,000 |
So in 2011/12, Maya may deduct from her £100,000 contribution the actual allowance available for the year of £50,000 together with her deemed allowances brought forward of £30,000. She will have an excess contributions charge due on the balance of £20,000.
Note that the fact that the contribution exceeded the available deemed allowance in 2009/10 does not affect the carry forward of the deemed allowance.
All change: different rules apply from 2011/12:
Where a pension contribution exceeds the £50,000 annual allowances the excess will be deducted first from any unused allowance brought forward, any balance will then be subject to the excess contributions charge.
|
Year |
Contribution £ |
Annual allowance |
Unused/(excess) |
C/fwd |
|
2010/11 |
40,000 |
50,000 |
10,000 |
10,000 |
|
2011/12 |
60,000 |
50,000 |
(10,000) |
- |
|
2012/13 |
30,000 |
50,000 |
20,000 |
20,000 |
|
2013/14 |
100,000 |
50,000 |
(50,000) |
- |
Maya would have an excess contributions charge in 2013/14 of £30,000 (£100,000 - £50,000 – 20,000).
For illustrations of this and the pensions input calculations see Pensions: tax rules and planning
