SIPP questions

[Deleted User]

Hello,

My friend has asked few very specific questions about SIPP and I was not able to answer them. I apologise if there have been asked here before.

1. Can one contribute to private SIPP and to employer pension plan in one tax year? No limits like in ISA etc?

2. As sole trader, I understand he can invest up to 100% of his annual income to his SIPP. Correct?

3. SIPP contributions are reportable on tax return? If yes, why? Is there any tax incentive to report SIPP contributions, how does that work? (accountant would do annual tax return for him)

4. If one has no income, he can invest up to £2880 per annum. But once £1000 (before tax) is earned via salary, then he can invest £2880 + £1000 into SIPP? Or other amount?

I'd appreciate any replies. Thanks!

Dazed_and_C0nfused

1).  Yes but there are limits.

2).  In theory yes but again there can be limits in some situations.  But he only would only pay over 80% of the profit, the pension company, courtesy of HMRC, would add the basic rate tax relief making up to a gross contribution equal to his profit.  For example profit £10,000 would mean he contributes £8,000 and the pension company adds the 25% uplift giving a fund of £10,000.

3).  They are required on a tax return however for a lot of people there is no personal tax benefit over and above the basic rate tax relief the pension company adds.  But they do impact the tax liability for some people in a number of ways.  They reduce your adjusted net income (which is what the Personal Allowance amount, High Income Child Benefit Charge and Married Couple's Allowance are all based on) and also increase the amount of your basic rate tax band.  Which in turn can reduce the amount of higher rate tax payable (or intermediate rate tax if Scottish resident for tax purposes).

4).  For the majority of people the most you  cancontribute is based on pensionable earnings, usually taxable pay and business profits (sole trader or partnership profit share). If this is in the range £0 to £3,600 then you can only only contribute £3,600 (being a personal contribution of £2,880 plus the basic rate tax relief of £720).  So if his only pensionable income was £1,000 then he could only make a gross contribution of £3,600 (£2,880 + £720 tax relief).

AshSher

Hi, I hope someone could help with this.  
I have a small SIPP (what is left form the shares reducing in value by 40% recently) with Hargreaves Lansdown.  I would like to take the remaining balance and invest it into shares of a private limited company of which I am a director.  The company invests in properties in ideally I would like to utilise the balance within the company for this.  

What are the steps in order to do this?  I do not even know where to start?
Thank you and stay safe. 

ColdIron

Are you 55 or older? If not it will have to remain in the pension

Zanderman

If you want to get wider advice on SIPPs try posting in the Pensions part of forum which is here:
https://forums.moneysavingexpert.com/categories/pensions-annuities-retirement-planning