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Sipp in drawdown so can I contribute £2880 or £4000

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Comments

  • If that is your only income yes
  • xylophone
    xylophone Posts: 45,705 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Will you have "relevant earnings" when you draw your TP?
    If so,  and they are under £3,600 (gross) you can still make a net contribution of up to £2880 to a SIPP and receive tax relief of up to £720.
    If in excess of £3600, then you may contribute your net relevant earnings up to a maximum of £3200, and receive tax relief up to a maximum of £800.
    For example, suppose you had relevant earnings of £ 3800 gross. You could pay in £3040 and receive TR of £760.
    Suppose you had relevant earnings in excess of £4000 - you are still confined to a maximum contribution of (net) £3,200 because you have triggered to MPAA by already having taken money in excess of the PCLS from a DC pension.  
  • In my own personal experience - (I am in the same boat) and the maximum I can pay in is £2880. net - (tax man pays in £720.00 = £3600.00.  - Hope this helps. 
  • xylophone
    xylophone Posts: 45,705 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Will you have   have any "relevant earnings" once you start drawing your TP? Pension income does not count as "relevant earnings".
    If you have no relevant earnings, (  or relevant earnings of less than £3,600 ) then you are limited to a net contribution of up to £2880 - the pension provider will claim up to £720 and add it to the pension.
    Let's suppose you do have relevant earnings in excess of £3,600. You are then limited by the MPAA because you have taken  money in excess of the PCLS from the DC pension that you have in addition to your DB TP.
    If you were earning £4000, you could contribute  £3200 and the provider would claim £800 and add it to your pension.
    If you were earning more than £4000, you could still only contribute a net £3200 (£4000 gross) as above because of the limit imposed by the MPAA.

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