How SIPP affects taxable income

talexuser

zagfles wrote: »

No. It extends the basic rate band,

Here is my confusion, the SIPP is not mentioned in my tax code, presumably because tax relief is added directly to the fund (I'm not taking income from the SIPP)... fair enough.

However my savings interest is now taking me into the higher rate band (already retired, existing pensions on PAYE, not done a tax return so far), so do the SIPP contributions affect gross income calculation for that scenario?

bigadaj

talexuser wrote: »

Here is my confusion, the SIPP is not mentioned in my tax code, presumably because tax relief is added directly to the fund (I'm not taking income from the SIPP)... fair enough.

However my savings interest is now taking me into the higher rate band (already retired, existing pensions on PAYE, not done a tax return so far), so do the SIPP contributions affect gross income calculation for that scenario?

You should complete a tax retrain and will benefit from additional tax relief on the 40% income tax paid. You can get hmrc to adjust your tax code going forward to get the tax relief as you go along, which they'll also do with a simple phone call.

talexuser

Thanks, so the basic band of £32000 next tax year is effectively extended by adding £2880 net SIIP contribution, or £3600 gross SIIP contribution if you are in the 40% income band?