SIPP in cash

starfish10

My husband is thinking of opening a SIPP this tax year, will he be able to deposit cash in it and get tax relief and leave it as cash until ready to invest? Do most providers allow this?

dunstonh

starfish10 wrote: »

My husband is thinking of opening a SIPP this tax year, will he be able to deposit cash in it and get tax relief and leave it as cash until ready to invest? Do most providers allow this?

All of them do. However, be wary of leaving it as cash. Whilst the intention to invest may be there, I have come across people that had the same intention but left it in cash for years before they did anything about it.

starfish10

If he makes a contribution to this SIPP and it is slightly over his relevant earned income can this tax relief then be paid back as he is self employed and accountant does tax return?

[Deleted User]

Sure can, I have thirty odd £k sitting as cash in the SIPP for investment shortly

[Deleted User]

Apologies in advance for interrupting this thread, but I think that the questions I have are somewhat related to the OP as they involve both cash a SIPP and a planned retirement ...

First the background...
I am 57 and thinking of retiring shortly by taking a hit on my DB pension which would normally kick in at age 60.

I contribute £52.70 (10%) PW to the main DB scheme plus another £86.02 PW (16%) to an AVC - which is the maximum I am allowed under the scheme rules. My employer contributes £79.05 PW to the main scheme and £21.53 PW to the AVC.

Hope this makes sense so far .....

Since August last year, I have also contributed £200 PW into an additional DC AVC which sits outside the main scheme. Upon retirement I intend to move this money into drawdown via a SIPP with another pension provider as the company scheme doesn't currently offer drawdown facilities.

Now (Finally) to my question ... :j

Once I decide on a date for retirement (Say July 1st), would it be possible to move a sum of money (My salary - contributions above) into the DC AVC, and would I then be able to apply for a tax rebate (rules following budget allowing!)?

If this is the case, it seems almost like 'free money' as HMRC would effectively be topping up the amount by 20%




So:

1. Do my ideas make sense or am I missing something?
2. Am I correct in thinking that I could also use my Tax allowance for previous years up to my salary amount (salary is below 40k)?
3. Are my employers contributions included in the maximum amount that can be contributed to a pension in any Tax Year?
4. How would I claim any tax rebate?

Thanks for reading my ramblings :A and comments awaited with anticipation before I go back to my calculations ...

mania112

starfish10 wrote: »

If he makes a contribution to this SIPP and it is slightly over his relevant earned income can this tax relief then be paid back as he is self employed and accountant does tax return?

No, contributing over his earned income should be avoided. Also note that the contribution 'limit' is the gross contribution including the tax relief.

example: Earned income is £20,000, the max contribution is therefore £16,000 and is topped up to £20,000.

zagfles

Sleazy wrote: »

Apologies in advance for interrupting this thread, but I think that the questions I have are somewhat related to the OP as they involve both cash a SIPP and a planned retirement ...

First the background...
I am 57 and thinking of retiring shortly by taking a hit on my DB pension which would normally kick in at age 60.

I contribute £52.70 (10%) PW to the main DB scheme plus another £86.02 PW (16%) to an AVC - which is the maximum I am allowed under the scheme rules. My employer contributes £79.05 PW to the main scheme and £21.53 PW to the AVC.

Hope this makes sense so far .....

Since August last year, I have also contributed £200 PW into an additional DC AVC which sits outside the main scheme. Upon retirement I intend to move this money into drawdown via a SIPP with another pension provider as the company scheme doesn't currently offer drawdown facilities.

Now (Finally) to my question ... :j

Once I decide on a date for retirement (Say July 1st), would it be possible to move a sum of money (My salary - contributions above) into the DC AVC, and would I then be able to apply for a tax rebate (rules following budget allowing!)?

If it's an AVC you'd usually contribute to it direct from your pay, and get the tax relief in your payslip via net pay (ie they take the contribution off before taxing you).

If this is the case, it seems almost like 'free money' as HMRC would effectively be topping up the amount by 20%




So:

1. Do my ideas make sense or am I missing something?
2. Am I correct in thinking that I could also use my Tax allowance for previous years up to my salary amount (salary is below 40k)?
3. Are my employers contributions included in the maximum amount that can be contributed to a pension in any Tax Year?
4. How would I claim any tax rebate?

Thanks for reading my ramblings :A and comments awaited with anticipation before I go back to my calculations ...

There are 2 limts to consider, 100% of relevant earnings (or £3600 if greater), this applies to your contributions only and there is no carry forwards, and the annual allowance of £40k which applies to both yours and employer contributions, but you can carry forwards from the past 3 years so unlikely to be a problem unless you're talking a large amount and you've made large contributions in previous years.

The level of tax relief is based on the year of contribution. So you can't (eg) get 40% relief for tax paid at 40% in previous years.

You can get 20% relief even if contributions take you below the personal allowance but only in a RAS scheme (mostly private pensions) not ones that operate net pay (like most employers schemes).

[Deleted User]

zagfles wrote: »

If it's an AVC you'd usually contribute to it direct from your pay, and get the tax relief in your payslip via net pay (ie they take the contribution off before taxing you).

Sorry, my intention was to pay say 20k+ from savings into the DC AVC before I retire. I'll have already paid 4k tax on this and was curious whether I could then claim the tax back ???

zagfles

Sleazy wrote: »

Sorry, my intention was to pay say 20k+ from savings into the DC AVC before I retire. I'll have already paid 4k tax on this and was curious whether I could then claim the tax back ???

How much will you have earned that tax year? You can't put more than 100% of your earnings (gross) into a pension. Also your scheme probably operates net pay so you won't get tax relief in the personal allowance, you'll have to ask them. It might be better to wait till you transfer to the SIPP then make the contribution.

[Deleted User]

Thanks, hadn't thought about putting it directly into the SIPP