Redundancy 31st March-SIPP opening timescale?

philng

I am currently due to take VR 31st March and will receive a largish sum. I ntend to make a one off payment to my DB Pension of around £20k before I leave. I know this can be taken as a tax free lump sum when I draw pension at 60 along with existing £50k already contributed by this means.
I am then looking to open a SIPP with say £40k so I can reclaim the 40% tax relief on this and then drawdown between age 55-60 prior to drawing my DB pension.
Does this £40k have to be credited to SIPP before 5th April 2016? I know I have spare capacity over the last 3 years to make the total £60k payment to my pension.

saver861

philng wrote: »

Does this £40k have to be credited to SIPP before 5th April 2016?

For that tax year year 2015/16 it does.

kidmugsy

philng wrote: »

Does this £40k have to be credited to SIPP before 5th April 2016?

In your shoes I'd make plans to ensure it could be done. Or even do it before the Spring budget speech. This could be the last year that 40% tax relief is available.

zagfles

philng wrote: »

I am currently due to take VR 31st March and will receive a largish sum. I ntend to make a one off payment to my DB Pension of around £20k before I leave. I know this can be taken as a tax free lump sum when I draw pension at 60 along with existing £50k already contributed by this means.
I am then looking to open a SIPP with say £40k so I can reclaim the 40% tax relief on this and then drawdown between age 55-60 prior to drawing my DB pension.
Does this £40k have to be credited to SIPP before 5th April 2016? I know I have spare capacity over the last 3 years to make the total £60k payment to my pension.

Yes, if you want tax relief in the 2015/16 tax year.

You'll need a total taxable income, ie pay plus the taxable part of redundancy, of over £102,000 in the 2015/16 tax year in order to get 40% relief on the whole SIPP contribution.

You're probably best opening the SIPP well before 31 March and perhaps making a nominal contribution, so you're ready to make the large contribution before 5 April.