How much into SIPP for low earner ?

Mecb096a

Hi,

I am looking for advice on a simple question; at least I think its simple.....

My wife works part time and earns £6-7K/yr, she pays no tax.

She pays £2880 into a SIPP and the HMRC top it upto £3600.

I understand that she can pay her total earnings into her SIPP, but do the HMRC top up all of her earnings as if she had paid tax, or will they only top up the £2880 ?

Thanks.

P.

HappyHarry

Mecb096a wrote: »

Hi,

I am looking for advice on a simple question; at least I think its simple.....

My wife works part time and earns £6-7K/yr, she pays no tax.

She pays £2880 into a SIPP and the HMRC top it upto £3600.

I understand that she can pay her total earnings into her SIPP, but do the HMRC top up all of her earnings as if she had paid tax, or will they only top up the £2880 ?

Thanks.

P.

She can pay £6-7k (gross) into her SIPP and receive tax relief on all of it.

E.g. If she earns £6000, then she could make a personal contribution of £4,800, and the SIPP provider would claim £1,200 tax relief and add it to her SIPP funds.

zagfles

If she has a works pension, she'll need to take off the amount she contributes (ignore employer conts). For instance if she earns £6k and pays 5% to her employer's pension the max she can put into a SIPP net is £4560 (6k*0.95*0.8)

dunstonh

She pays £2880 into a SIPP and the HMRC top it upto £3600.

Technically she pays £3600 into a SIPP or which she pays the net contribution of £2880. Pensions are always discussed in gross terms when looking at limits.

So, her income can be matched by the gross pension contribution. £6k gross earnings = £6k gross pension.

Mecb096a

Hi

Thanks for the advice - it really helps...

Ta

P

HappyHarry

They don't only benefit those interested in commercial property.

Massive investment choice, drawdown and accessibility make them the pension of choice for many that are not interested in commercial property.

ThinkingOutLoud_2

Slight clarification might help
- you can pay in as much of her earnings as your like subject to the maximum annual limit (£40k today).
- the £3,600 limit is for those earning zilch - they can still pay in (from their savings or their partners monies..).
- And as noted if she has multiple pensions, the limits are in aggregate not per pension.
_________________________________________________________
Sorry to now divert to reply to Kate who is not correct as noted by others.

Kate

• What makes you say that?
• FCA say "SIPPs are intended to provide individuals with the ability to invest in a wide range of opportunities."
• You cannot know what if they owns a commercial property or not - whatever difference you think that makes.

>>>> Take as much care as possible before giving your view - none of us will always be right per my signature, but if we all try to be...

dunstonh

In another thread, Kate says she works for the FCA. I suspect she is neither an IFA or works for the FCA.

ThinkingOutLoud_2

dunstonh wrote: »

In another thread, Kate says she works for the FCA. I suspect she is neither an IFA or works for the FCA.

I think we have all posed that question - but if her posts so far are representative of the advice an FCA staff member can muster - there is room to approve :-)

I think our mutual suspicions are understandable given her MSE id includes IFA and she claims to work for the FCA.

Kate - please come clean - tell us all!

dunstonh

I reported Kate to the board earlier today. It appears they have removed all her posts.

bigadaj

dunstonh wrote: »

I reported Kate to the board earlier today. It appears they have removed all her posts.

Her user name made her very easy to google.

She seems to be an administrator at a firm of ifas, maybe trying to progress but with a woeful knowledge base to start from.