Pensions – New carry forward provisions
As our readers will be aware the annual allowance for tax relief on pensions is being reduced to £50,000 with effect from 6 April 2011.
There will be a three year carry forward rule that allows taxpayers to carry forward unused annual allowance from the last three tax years if they have made pension contributions in those years.
HMRC received a number of queries relating to the draft legislation and guidance on this issue which was published back in October. In light of these queries, HMRC have provided further clarification including:
- An individual can carry forward unused annual allowance from any year during which they were a member of a registered pension scheme, regardless of whether they made any contributions during that year or had a nil pension input amount during that year.
- The amount of any unused annual allowance for the years 2008-09, 2009-10 and 2010-11 should be calculated by applying the rules that would apply if the pension input period for each of those years were a pension input period ending in the tax year 2011-12 and using an assumed annual allowance of £50,000 for each of those years.