Pension allowance available

Dear Sir,

I have a question for the calculation of the registered pension contribution.

So the individual has the annual salary of £204,000, and that’s her sole income. She has been employed since 2007.

She joined the registered personal contribution on 06.04.2017

Her gross contributions are as follow:

2017: £9,000
2018: £38,000
2019: £120,000

And her employer contributes £4,000 to the scheme each year.

Kaplan answer said that her annual allowance available for the tax year of 19/20 is as follow:

“B/f from 17/18 (£40,000-£9,000-£4000) = £27,000

Used in 18/19 (£40,000-£38,000-£4,000) = (£2,000)

Current year 19/20 = £40,000

Therefore, her current year annual allowance for 19/20 is £65,000.”

I don’t understand this calculation from Kaplan.

This is my thought on the calculation:

As her annual income is always £204,000, so she will entitled to a minimum pension contribution of £10,000. The exception is 19/20 where the contribution brings the adjusted income level to below £150,000 to £84,000 (hence the £40,000 pension allowance)

As the pension allowance could be carried forwards up to 3 years, we would have the annual allowance for

17/18: £40,000 – £13,000 (EE+ER contribution) => carry forwards amount = £27,000

18/19: £10,000(pension allowance) + £27,000(b/f) – £38,000 – £4,000) = (£5,000)

19/20: £40,000 – £5,000 (b/f) = £35,000

Therefore the available pension contribution allowance for the year 19/20 would be £35,000.

I am not sure about my calculation and I don’t know how Kaplan’s guide gives the pension contribution allowance in year 18/19 of £40,000. If possible could you please tell me where I did wrong in my work and the reason for the £40,000 pension allowance in year 18/19.

Thank you very much.

Yours sincerely,

Trang