Carry Forward Rules

[Ifnotnow8]

Hello

I made an error & contributed £3600(gross) into my Sipp instead of £12600 which was my earned income for 2020/2021.

I am in the process of completing my self assessment for 2021/2022. My earnings this financial year will be around £6000. Would l be allowed to use the carry forward rules ie £9000 (unused annual allowance for 2020/21) and £6000 (earnings 2021/22) = £15000(gross) to be paid into my Sipp for 2021/2022?

Thanks

[ursaminortaur]

Hello

I made an error & contributed £3600(gross) into my Sipp instead of £12600 which was my earned income for 2020/2021.

I am in the process of completing my self assessment for 2021/2022. My earnings this financial year will be around £6000. Would l be allowed to use the carry forward rules ie £9000 (unused annual allowance for 2020/21) and £6000 (earnings 2021/22) = £15000(gross) to be paid into my Sipp for 2021/2022?

Thanks

Carry forward just carries forward the unused annual allowance from the previous three years to increase this year's annual allowance to above £40,000.
To get tax relief on your contribution you still need to have relevant earnings to cover that contribution ( if the contribution is more than £3600 gross).
If your relevant earnings for this year are less than this year's annual allowance of £40,000 then you won't be able to use carry-forward at all as you have to use up this year's annual allowance before using any carried forward allowance.

https://www.moneyhelper.org.uk/en/pensi ... ry-forward

To use carry forward, there are certain conditions that need to be met. These include:

1. Contributions to your pensions must have used all of your annual allowance in the tax year you wish to use the carry forward rules.

2. You must have been a member of a UK-registered pension scheme* (this does not include the State Pension) in each of the tax years from which you wish to carry forward from (you do not need to have paid any money into these schemes).

3. You must use any unused annual allowance from the earliest year first (you can only go back three years) and can only use it once. This means it can only be used once and if fully used for a previous tax year, cannot be used a second time.

4. If you are subject to a tapered annual allowance, you need to measure any unused annual allowance against the tapered allowance for each given year (which may change depending on your adjusted income). You can find more information on the tapered annual allowance in our guide Tapered annual allowance.
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In addition, to receive tax relief on your contributions, you must earn at least the amount you wish to contribute in the tax year you are making the contribution for. So if you, for example, want to make total contributions of £100,000 you must earn at least £100,000 in that tax year. This doesn’t apply if your employer is making the contribution on your behalf.


A long time ago there used to be something called carry-back which would have allowed you to make a contribution and have it counted towards a previous year unfortunately the government stopped that in 2006.

http://citywire.com/funds-insider/news/ ... ck/a270554