Putting money into a SIPP

sparky0138

I know that you can put as much as you earn in a year into a SIPP and get tax relief but when should you do this?

Do you look at the amount on your last P60 and then put up to that amount in by the end of the year?

greatkingrat

It is up to you when you pay your contributions, as long as they are made by the last day of the tax year.

Generally, your P60 won't be received until April/May of the following year so wouldn't be any use, so you would need to use the figures from your payslips.

You can even pay the money into the SIPP before you've earnt it based on your expected earnings, although then there is a risk that your earnings may reduce unexpectedly.

xylophone

If your earnings are irregular, you can wait until (say) late March in the tax year in which you wish to make the contribution and make it then.

Remember that you make a net payment into the pension - for example, earn £30,000, pay in £24,000 and the provider claims tax relief of £6000.

Otherwise even non earners can pay up to £2880 into a pension and receive tax relief of £720.

You could therefore make this payment early in the tax year and see where you were later in the year with regard to additional contributions.

Marcon

sparky0138 wrote: »

I know that you can put as much as you earn in a year into a SIPP and get tax relief

Not quite. Depends how much you earn - capped at £40,000 (or £4,000 if you are subject to the Money Purchase Pension Allowance), including tax reclaimed by the pension provider + any employer contribution on your behalf.

Paul_Herring

sparky0138 wrote: »

I know that you can put as much as you earn in a year into a SIPP and get tax relief but when should you do this?

Whenever you want.

Probably better off paying in monthly however. (Advantages: pound cost averaging, you know how much you've earned by then, you don't have the money sitting around doing nothing.)

sparky0138

Thanks! This is all very helpful.

SmashedAvacado

Marcon wrote: »

Not quite. Depends how much you earn - capped at £40,000 (or £4,000 if you are subject to the Money Purchase Pension Allowance), including tax reclaimed by the pension provider + any employer contribution on your behalf.

And if you earn megabucks your allowance can be as low as £10k

lisyloo

I'd agree with paul_herring. Best to pay monthly for two reasons.
Firstly averages out the highs and lows of share market volatility wrt buying price.
Secondly if it comes out of your salary straightaway you get used to it and don't miss it and adjust.


I paid in from day 1 and 28 years later I have a decent sized pension fund and never really missed the deductions from my salary.

FatherAbraham

SmashedAvacado wrote: »

And if you earn megabucks your allowance can be as low as £10k

Closer to one hundred kilobucks than a megabuck.