Reclaiming Income Tax Question

barnstar2077

I earn £20,239.68 a year. I have a work based pension with Aviva, I put 5%(£84.33) through Salary Sacrifice and 5% as an AVC into my pension. My company then put in a further 10% in to bring the total up to £337.32. I recently started my own SIPP and pay in £500 a month, which the tax man has kindly been adding £125 to. I don't know why I didn't think of it earlier, but I wont have paid enough tax to claim back the £125 every month as I had planned to. My payslip says I paid £110.20 last month in income tax. My SIPP provider reclaims the tax for me, so my question is, if I carry on as is what will happen? Will the tax man simply stop paying up towards the end of the year? Could I be in trouble for not telling someone? How does it work please.

Thank you

Dazed_and_confused

You are confusing two unrelated things.

A non earner who pays no tax can pay £2,880 into a pension and receive £720 in tax relief.

The question you need to ask is if you are eligible to pay £625/month into the SIPP as a tax relief eligible contribution. If you are you have nothing to worry about.

barnstar2077

Are you saying it doesn't matter how much income tax I have paid?

Dazed_and_confused

Yes. Paying income tax isn't a requirement to get "relief at source" pension tax relief.

If you look at the threads on here loads are specifically about contributing whilst paying no tax.

Providing you meet the contribution limit rules there isn't a problem.

xylophone

I earn £20,239.68 a year.

See https://www.litrg.org.uk/latest-news/news/181214-do-you-understand-how-tax-relief-your-pension-contributions-works