Reducing Tax - Pension contributions

[Ham_and_Jam]

Both me & Mrs H&J have crept into the dreaded higher tax bracket and are looking to reduce our tax liability using pension contributions.

Clumsily the actual amount wasn’t noticed until we have done our 2024/25 self assessments. These have not yet been signed or filed with HMRC

So, my question is can we do reduce our 2024/25 tax bill by paying contributions now? I.e backdating the contributions.

[LeoSayer]

In a word, no.

However you can reduce last year's tax bill by making a "carry back" gift-aid charitable contribution and then including this on your tax return.

Edited by LeoSayer on Friday 31st October 21:01

[Panamax]

Leo - You might want to review what you have written. It doesn't seem to fit together. Gift aid?

[Crumpet]

I once made a one-off payment to my SIPP provider and they credited the 20% relief within a few days.

I then wrote a nice letter to HMRC, with supporting evidence, and asked them for the additional relief, including using some allowance from the previous year. Six months later a nice fat cheque turned up in the post.

If you make a payment to use allowance from a previous year I don’t know if the higher rate relief can only come from the current tax year? If that makes sense?

[Sheepshanks]

Crumpet said:

I once made a one-off payment to my SIPP provider and they credited the 20% relief within a few days.

I then wrote a nice letter to HMRC, with supporting evidence, and asked them for the additional relief, including using some allowance from the previous year. Six months later a nice fat cheque turned up in the post.

If you make a payment to use allowance from a previous year I don t know if the higher rate relief can only come from the current tax year? If that makes sense?

You have to max out the current year before you can carry back to prior years.

[Crumpet]

Sheepshanks said:

You have to max out the current year before you can carry back to prior years.

Ah, so basically the tax relief part of it has to come from the current year? Even though you can spill over into previous years for the allowance?

I know mine was maxed out and there was still plenty of higher rate to eat into so I still got higher rate relief.

[Sheepshanks]

Crumpet said:

Ah, so basically the tax relief part of it has to come from the current year? Even though you can spill over into previous years for the allowance?

I know mine was maxed out and there was still plenty of higher rate to eat into so I still got higher rate relief.

Not 100% sure, but I think that's right. Even if you have available allowance from previous years, you can't contribute more than you earned in the current year.

[LeoSayer]

Panamax said:

Leo - You might want to review what you have written. It doesn't seem to fit together. Gift aid?

Cheers, updated