RPSM05101200 - Technical Pages: Contributions and tax relief: Member contributions: Entitlement to tax relief: Carry back provisions

Transitional provisions: Carry back

Before 6 April 2006, individuals who paid premiums to a retirement annuity contract in any tax year could elect to have those premiums, or part of them, treated as having been made in the previous tax year. If the member had no net relevant earnings in this preceding tax year, the premium could be treated as being paid in the tax year before that. To take advantage of this the individual had to make the election by 31 January of the tax year immediately following the year in which the contribution was paid.

Example

Alan estimated that his earnings for the tax year ending 5 April 2005 were to be £10,000. As he was aged 51 he was able to contribute 20% of these earnings into the retirement annuity contract and so he paid a premium of £2,000.

On 1 February 2006 he realised that his earnings for the year ending 5 April 2005 were in fact £13,000. In these circumstances he would have scope to pay a further £600 (£3,000 x 20%) premium during the year ending 5 April 2006 and allocate it against the previous year.

Alan has until 31 January 2007 to make an election to have his premiums treated in this way.

This provision in section 619(4) ICTA 1988 has now been repealed.

However individuals will still be able to take advantage of carry back in relation to any premiums paid in the tax year ending 5 April 2006. Any election to carry back for this tax year can still be made by 31 January 2007.

No carry back of contributions will be allowed for premiums made on or after 6 April 2006.