Not everyone is in a position maximise their pension funding each tax year. This does not always mean that the opportunity is lost. Individuals are able to back fill their annual allowances from the previous three tax years.
For some this can mean boosting their retirement savings by as much as £160k gross in a single tax year.
There are a few conditions that need to be met to qualify for carry forward unused allowances:
- Contributions in at least one of the previous three tax years must have been less than the annual allowance.
- Individuals must fully use the current tax year annual allowance first and
- Must have been a member of a pension scheme in each year you that is to be back filled
Whilst it is not possible for an individual to carry forward more than they have earned in the current tax year, the full contribution will benefit from tax relief.
At Tideway we can offer you advice on how to maximise your pension funding and the tax efficient nature of pension contributions. Our advisers will work with you to create a suitable investment strategy, recommending the most effective solution.