What is the carry on about carry forward?
- Describe what carry forward is.
- List the rules governing how carry forward works.
- Identify the split into two mini tax years and how to inform HMRC.
- Describe what carry forward is.
- List the rules governing how carry forward works.
- Identify the split into two mini tax years and how to inform HMRC.
Hands up who remembers the old carry back and carry forward rules?
These days we just have carry forward mark two, which was brought back in its current format in 2011 to 2012.
Carry forward makes it possible, subject to conditions, for unused annual allowances from the three previous tax years to be carried forward to the current tax year to increase the overall annual allowance available.
This can allow money purchase pension contributions and/or defined benefit accrual in excess of the current tax year’s annual allowance to be made in a tax year without incurring an annual allowance tax charge.
It is a very useful facility for those who may have missed out on maximising their pension funding in earlier years.
Individuals who have been a non-UK resident for a period of time are able to carry forward unused annual allowance from tax years when they were not UK resident.However, the various changes that have taken place over the past few years, including the transitional year in 2015 to 2016, can make it difficult to pin down exactly how much someone is able to contribute (or accrue, if defined benefit).
Also, we now have the money purchase annual allowance and the tapered annual allowance which can make a big difference to the funding position for those affected by them.
There are strict rules governing how carry forward works:
