SIPP contribution

C_Mababejive

I am struggling to see if a sipp is any use to me. Potentially i could retire at 55 with about 20k pa. If i start pushing money into a sipp then i will get 20% tax relief but when i pull it out, i will still be up for 20% tax ??

Shedman

C_Mababejive wrote: »

I am struggling to see if a sipp is any use to me. Potentially i could retire at 55 with about 20k pa. If i start pushing money into a sipp then i will get 20% tax relief but when i pull it out, i will still be up for 20% tax ??

But of course you are forgetting the 25% TFLS so only paying 20% tax on 75% of the pot. Simple example: £8k subscribed, £2k top up from taxman hence £10k pot. £2.5k out tax free, £7.5k out at 20% tax so net £6k. Total out net of tax £8.5k for £8k contributed

C_Mababejive

Shedman wrote: »

But of course you are forgetting the 25% TFLS so only paying 20% tax on 75% of the pot. Simple example: £8k subscribed, £2k top up from taxman hence £10k pot. £2.5k out tax free, £7.5k out at 20% tax so net £6k. Total out net of tax £8.5k for £8k contributed

TFLS ?

The other thing is, whilst its in the pot, what could you invest in that was fairly safe? you could put a wodge of cash in a sipp and watch as it goes backwards?

I guess you would have to be careful of charges also and take that into account??

I guess i need to fully understand it and be convinced that its a total/or close to win win situation..

RickyB2000

C_Mababejive wrote: »

TFLS ?

The other thing is, whilst its in the pot, what could you invest in that was fairly safe? you could put a wodge of cash in a sipp and watch as it goes backwards?

I guess you would have to be careful of charges also and take that into account??

I guess i need to fully understand it and be convinced that its a total/or close to win win situation..

Tax free lump sum.

You can hold in cash if you want. You won't get any interest in most SIPPs though. Depends on the timeframes whether interest and charges will seriously undermine the benefits.

grey_gym_sock

what would you be doing with the money if you don't push it into a SIPP?

my point is that you could perhaps do something very similar with it inside a SIPP.

keeping charges reasonably low, and not doing anything too risky, are sensible aims, but they apply whether or not you use a pension.

and "i don't know" would be a perfectly reasonable answer to the question.