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Fern joined a registered pension scheme in2017/18and made a gross contribution of £14,000. She had not been a member of registered pension scheme before this time. She did not make any contribution in 2018/19. Fern has relevant earnings of £101,000 in 2019/20 and no other sources of income. What is the maximum gross pension contribution Fern can make in 2019/20 without incurring an annual allowance charge, taking into account any brought forward annual allowance?
my answer: unused allowances of 2017/18(4000-14000=26000)+unused allowances of 2018/19(40000)+ unused allowances of 2019/20(40000)=106000
assuming Fern decides to contribute 106000(gross) then she will have to pay 106000-101000*20%=85800 and the rest 20% of RE will be paid by HMRC(i.e. 20200). This way there will be no AA charge on the highest marginal rates of tax, as the gross contribution is covered by unused AA of previous and this year. but she will get a basic rate tax relief on RE only as gross contrn are more than it.
Anything I am missing out sir?
The requirement of the question you state above is:
“What is the maximum gross pension contribution Fern can make in 2019/20 without incurring an annual allowance charge, taking into account any brought forward annual allowance?”
The answer is £106,000 as you have already calculated!
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