Paying into SIPP after taking DB pension

Bonneyd

My husband (63) has just retired with an NHS pension of £24,000 p.a. He is doing ad hoc work for the NHS which will probably bring his annual income (including his pension) to over £50,000 this tax year. My questions are: 1. How much will he be allowed to contribute to a SIPP this year? 2. Will he be able to claim the HR tax relief on these contributions?
Any advice would be very much appreciated as he is trying to invest these earnings as tax efficiently as possible.

Dazed_and_confused

Is he contributing to a pension with the "ad-hoc" employment?

Where is he resident for tax purposes?

What does "over £50,000" really mean? Appreciate you won't know exactly but £50,001? £60,000? Can make a big difference.

Bonneyd

No, he isn't contributing to a pension with the ad hoc work. He is resident in the UK for tax purposes. He could potentially make an extra £60,000 gross from the work this year.

Bonneyd

We want to know if there is an annual limit of £4000 that he can put into his SIPP because he's taking his NHS pension?

crv1963

If he is "only" getting NHS pension than the £4000 limit does not apply as it is all DB pension. Your husband needs to be careful that his ad hoc earnings from NHS work and his NHS Pension do not when added together come to more than his finishing NHS salary before retirement or the NHS Pension Agency will claim some of his pension back.

This rule will not apply if his ad hoc earnings are not from an NHS Payroll.

HappyHarry

Bonneyd wrote: »

We want to know if there is an annual limit of £4000 that he can put into his SIPP because he's taking his NHS pension?

No.

As the NHS is a defined benefit pension, this does not change the amount he can add to a SIPP, I.e. it doesn't trigger the £4,000 Money Purchase Annual Allowance (MPAA).


Edit crossed with crv1963 above.

Bonneyd

Thanks to you both. We didn't know the NHS Pension Agency could claim pension back - thanks for that very useful information crv.

Marcon

Bonneyd wrote: »

Thanks to you both. We didn't know the NHS Pension Agency could claim pension back - thanks for that very useful information crv.

If's he is on the NHS payroll as your answer suggests, he is an NHS employee - and entitled to be enrolled into NEST (used for NHS employees who are not eligible to join the NHS pension scheme e.g. because they are already NHS pensioners, like your husband) and get the benefit of an employer contribution. Worth doing that before he pays anything in to a SIPP.

Bonneyd

Thank you Marcon - we weren't aware of that option and will investigate further.

jamesd

He's allowed to pay the whole of his gross pay into pensions each year, provided the gross total paid in by him and his employer is no more than the 40k annual allowance. In addition he can carry forward unused allowance from the last 3 years.

He tells HMRC the gross that ends up in the pension and they increase his basic rate band by that amount. This gives him the higher rate relief.

Twoplus

Crv as I understand it only those who take their NHS pension before the schemes normal pension age have an earnings limit if they go back to work, eg those with special class status or retire due to ill health.
So in this case I doubt the abatement rules will not apply as I guess the posters schemes normal retirement age was 60.