Repatriating to UK - using 3 years unused pension allowance
Discussion
Grateful for an answer on the off chance anyone definitively knows. Forgive my ignorance if got it all wrong.
Scenario
UK staff. Paid usual tax etc before left They are offered an expat position. They go overseas as a non resident for few years. The employer informs the UK pension fund will restart on their arrival back to UK and the overseas employee one they will use (whilst employee abroad) freezes.
Q: assuming current rates of gov pension allowance would this employee be allowed to use any of the the past three years pensions allowance to ‘salary sacrifice’ into on return to UK usual duties as one is now if just in UK?
If yes theoretically that’s a £180,000 hole that may have some advantages in part filling (plus the allowance for the year of return) … so way more than will be needed for most and can perhaps be used over several rolling years (assuming todays gov pension terms)
Scenario
UK staff. Paid usual tax etc before left They are offered an expat position. They go overseas as a non resident for few years. The employer informs the UK pension fund will restart on their arrival back to UK and the overseas employee one they will use (whilst employee abroad) freezes.
Q: assuming current rates of gov pension allowance would this employee be allowed to use any of the the past three years pensions allowance to ‘salary sacrifice’ into on return to UK usual duties as one is now if just in UK?
If yes theoretically that’s a £180,000 hole that may have some advantages in part filling (plus the allowance for the year of return) … so way more than will be needed for most and can perhaps be used over several rolling years (assuming todays gov pension terms)
weeve said:
Grateful for an answer on the off chance anyone definitively knows. Forgive my ignorance if got it all wrong.
Scenario
UK staff. Paid usual tax etc before left They are offered an expat position. They go overseas as a non resident for few years. The employer informs the UK pension fund will restart on their arrival back to UK and the overseas employee one they will use (whilst employee abroad) freezes.
Q: assuming current rates of gov pension allowance would this employee be allowed to use any of the the past three years pensions allowance to ‘salary sacrifice’ into on return to UK usual duties as one is now if just in UK?
If yes theoretically that’s a £180,000 hole that may have some advantages in part filling (plus the allowance for the year of return) … so way more than will be needed for most and can perhaps be used over several rolling years (assuming todays gov pension terms)
You say 'a few years' . The rules allow 3 years prior to the current tax year. Claimed against relevant earnings. Were there any earnings taxed in the UK. A few years suggests there may be anywhere from nil to some but not 3 years. It's not my area but that is what i'm thinking. I would ask an expert or call HMRC.Scenario
UK staff. Paid usual tax etc before left They are offered an expat position. They go overseas as a non resident for few years. The employer informs the UK pension fund will restart on their arrival back to UK and the overseas employee one they will use (whilst employee abroad) freezes.
Q: assuming current rates of gov pension allowance would this employee be allowed to use any of the the past three years pensions allowance to ‘salary sacrifice’ into on return to UK usual duties as one is now if just in UK?
If yes theoretically that’s a £180,000 hole that may have some advantages in part filling (plus the allowance for the year of return) … so way more than will be needed for most and can perhaps be used over several rolling years (assuming todays gov pension terms)
The proposal is to be out for 3 -4 years, but because the UK pension remains registered (just not contributed to), the first informal advise (financial adviser but not used to this scenario) was that it would indeed be possible to use the allowance. However, my gut feel is that its more likely that the computer says 'no'. For sure formal advise will be sort. Cant believe this is unique scenario, however, as many folk chip out of UK for a few years to work elsewhere.
The maximum amount you can pay into a pension in a given year is your uk earnings in that year.
So if they were expat with £0 of UK earning in those years, they have £0/year unused allowance they can count back to, so none.
Edit- you may be able to wangle the 3k pension allowance everyone gets, but no more than that, and I think even that is a little cute - I don’t it’d be detected if you elected to use the unused allowance, but I’d be very surprised if you’re eligible for it if non-dom, but not my expertise.
So if they were expat with £0 of UK earning in those years, they have £0/year unused allowance they can count back to, so none.
Edit- you may be able to wangle the 3k pension allowance everyone gets, but no more than that, and I think even that is a little cute - I don’t it’d be detected if you elected to use the unused allowance, but I’d be very surprised if you’re eligible for it if non-dom, but not my expertise.
Edited by stuthe
on Thursday 1st February 07:52
on Thursday 1st February 07:52stuthe said:
said: The maximum amount you can pay into a pension in a given year is your uk earnings in that year. Yes.
So if they were expat with £0 of UK earning in those years, they have £0/year unused allowance they can count back to, so none. No.
The prerequisite for carrying forward is being part of a UK registered pension scheme, so if you had one before going abroad you can carry forward using the three previous years.So if they were expat with £0 of UK earning in those years, they have £0/year unused allowance they can count back to, so none. No.
If you're a high earner then check the Tapered Annual Allowance as that could limit how much you can carry forward.
Then you need enough Relevant UK Earnings in the tax year you want to contribute to at least match the gross amount you want to pay in.
Yes this latter description was highlighted by the lass I spoke to. The pension scheme is a bog standard employee (final salary) one so remains there (dormant but still doing its thing in the background) and will be contributed to should one take the posting and then return to same employer….. and thus was likely available for carry over allowance. Bit hypothetical as everything can change- but this is obviously not to be sniffed at if actionable. Thanks for the replies. Appreciated
Related question. Any tips for finding a IFI who has actually dealt with in and out expats and charges a fair price? Employer has recommended a large company but I feel I can do better judging on prelim advise and their proposed fees for support. Would be for UK tax on peripherals (savings interest etc), pensions and redundancy type Qs as they related to expats and their return to UK. Im fortunate to have a half decent job and a tertiary education but it’s clear proper advise would save unnecessary stress on financial issues. Thanks.
PistonHead007 said:
The prerequisite for carrying forward is being part of a UK registered pension scheme, so if you had one before going abroad you can carry forward using the three previous years.
If you're a high earner then check the Tapered Annual Allowance as that could limit how much you can carry forward.
Then you need enough Relevant UK Earnings in the tax year you want to contribute to at least match the gross amount you want to pay in.
Thank you for correcting me - apologies, I stand corrected If you're a high earner then check the Tapered Annual Allowance as that could limit how much you can carry forward.
Then you need enough Relevant UK Earnings in the tax year you want to contribute to at least match the gross amount you want to pay in.
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