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  • FIRST POST
    • mjfp509
    • By mjfp509 16th Mar 17, 9:07 AM
    • 119Posts
    • 29Thanks
    mjfp509
    Higher Tax Code. Investing lump sum into a SIPP?
    • #1
    • 16th Mar 17, 9:07 AM
    Higher Tax Code. Investing lump sum into a SIPP? 16th Mar 17 at 9:07 AM
    Whilst working in the public sector last year, I bought some extra added years pension which I had to pay gross (without tax relief). HMRC raised my tax code to something like 30,000L, so I didn't pay any income tax on my monthly salary to claim back the overpaid tax, rather than sending my a cheque.

    That job finished and I took a lower paid job, so never really claimed back all the tax due as my income dropped considerably to approx 11k this tax year.

    I am still on the higher tax code. My question is: I want to invest a lump sum into a SIPP. Will I still be able to get my tax paid back, e.g. if I invested 8K, it would get topped up to 10k?

    Thanks.
    Last edited by mjfp509; 16-03-2017 at 9:10 AM.
Page 1
    • Dazed and confused
    • By Dazed and confused 16th Mar 17, 9:16 AM
    • 1,264 Posts
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    Dazed and confused
    • #2
    • 16th Mar 17, 9:16 AM
    • #2
    • 16th Mar 17, 9:16 AM
    What do you mean by working in the public sector "last year".

    2016 as in 2015:16 tax year or 2016 as in 2016:17 tax year or something else?

    How much exactly have you earned so far in 2016:17 (March payslip figures should do if only one job in the tax year)
    • mjfp509
    • By mjfp509 16th Mar 17, 10:57 AM
    • 119 Posts
    • 29 Thanks
    mjfp509
    • #3
    • 16th Mar 17, 10:57 AM
    • #3
    • 16th Mar 17, 10:57 AM
    Worked in public sector tax year 2015-16, earning approx 10K before finishing in Sept.
    Worked in non-public sector tax year 2016-17, started in January 2016, earning approx 11K.
    Last edited by mjfp509; 16-03-2017 at 11:01 AM.
    • Kynthia
    • By Kynthia 16th Mar 17, 11:32 AM
    • 4,861 Posts
    • 6,844 Thanks
    Kynthia
    • #4
    • 16th Mar 17, 11:32 AM
    • #4
    • 16th Mar 17, 11:32 AM
    What was the figure you paid into your pension? Have you asked the HMRC if they'll keep your tax code what it is until all the relief is claimed?

    If you pay into a SIPP the provider claim the 20% automatically even if you aren't paying tax. However you need to confirm you aren't putting in more than your earned income for the same tax year.
    Last edited by Kynthia; 16-03-2017 at 11:37 AM.
    Don't listen to me, I'm no expert!
    • Dazed and confused
    • By Dazed and confused 16th Mar 17, 11:36 AM
    • 1,264 Posts
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    Dazed and confused
    • #5
    • 16th Mar 17, 11:36 AM
    • #5
    • 16th Mar 17, 11:36 AM
    First thing you need to do is get your tax code corrected otherwise you will start racking up some serious tax debts.

    Fortunately only earning 11000 this year should mean there isn't a problem this but you need to get the tax code back to normal otherwise you could end up needing all your pension to pay off your tax debts

    You can get basic rate relief (via the sipp provider) this tax year but you need to consider any payments you and your current employer make (possibly more complicated than this - see other threads on this topic), not just the 11000. Possible you could pay 8000 (net) but you might be pushing it.

    You do realise as well that you didn't really get much tax relief on the original lump sum paid in 2015:16. If you only earn 10000 to September 2015 plus a little bit (approx 2000?) from your new job then you would only paid minimal tax as the personal allowance that year was 10600. Probably saved you 200-300 tax overall in 2015:16. That's assuming the 10000 is taxable salary as well and not the gross salary amount before any civil service pension contribution is deducted.
    Last edited by Dazed and confused; 16-03-2017 at 11:51 AM.
    • Dazed and confused
    • By Dazed and confused 16th Mar 17, 11:41 AM
    • 1,264 Posts
    • 504 Thanks
    Dazed and confused
    • #6
    • 16th Mar 17, 11:41 AM
    • #6
    • 16th Mar 17, 11:41 AM
    Kynthia

    Tax relief is only due in the year the payment is made, it cannot be carried forward.
    • mjfp509
    • By mjfp509 16th Mar 17, 12:22 PM
    • 119 Posts
    • 29 Thanks
    mjfp509
    • #7
    • 16th Mar 17, 12:22 PM
    • #7
    • 16th Mar 17, 12:22 PM
    Thanks for your responses. Unfortunately, a while after I purchased the extra lump sum payment, I left the better paying job due to an unexpected redundancy, so lost out on a decent chunk of the tax I could have reclaimed. I then went a few months being unemployed - finding work was hard - before getting a much lower paid job

    This was the problem with paying the lump sum payment gross (you had to do it this way), then HMRC adjusting my tax code to reclaim the tax. My yearly salary then would have enabled me to reclaim all the tax due, if I had done the full year, which I didn't.

    At the moment, the pension I contribute is 1% and the employer 1% (a bit naff really), hence why I want to put a lump sum into a SIPP.

    So, this tax year would I be able to put 8K into a SIPP to get the 10K with tax added if my tax code is still 30000L?

    I will contact HMRC to change my tax code back to normal.
    Last edited by mjfp509; 16-03-2017 at 1:12 PM.
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