40% Tax on savings and Capital Gains Tax

emmb

talexuser wrote: »

If you have no earned income, then you can still put max £2880 a year into a SIPP which gets grossed up to £3600 by the taxman. If you are in higher tax that £3600 is added to the £43000 threshold so you save 20% tax on that portion, or even take you out of higher tax if within the £46600 according to adjusted net income if I'm correct in how it's been explained?

You can accumulate the SIPP and eventually take 25% tax free, and if a basic taxpayer by then the 20% tax on the remaining 75% is still ahead of the amount you put in because of the relief.

Hi,
Ooh that's interesting. Will have to put aside bit of time to look into that one and understand it. Thank you so much for posting. SIPP I take it is self invested..does that mean you have to choose the individual investments as such or just choose a pension package? Having been spoilt by a company pension in the past never really had to look at how to invest in pensions.
Cheers again

talexuser

As I understand it the "net adjusted income"
https://www.gov.uk/guidance/adjusted-net-income
becomes applicable when you move over the threshold into higher rate tax while paying into a private pension.

SIPP is a self select private pension, usually funds or shares for the long term but you could choose a bond fund to get a relatively more even return but obviously there is more risk of capital than savings.

It really depends on how long you expect to invest.