SIPP cash account credit adjustment

BrockStoker

So I logged into my Iweb SIPP account today, and found that I had an extra 5K cash (25% of my initial investment) to invest which was not there before - it was added 26 May. I'm guessing this is normal/the government topping up my SIPP? Or could it be an error? Just wanted to check before I start spending money which I'm not sure I own.

dunstonh

I'm guessing this is normal/the government topping up my SIPP?

Have you made a large single premium contribution in the last 8 weeks?

Or could it be an error?

could be

Just wanted to check before I start spending money which I'm not sure I own.

It will make sense to find out then. Your transaction history should give an indication.

BrockStoker

I opened the SIPP (my first) earlier on this year and 20K was paid in on 11 Mar. Both these transaction have the description "Credit Adjustment" in my cash account history. I can't see any other reference/record of it apart from having the credit available to trade in my SIPP.

coyrls

It's your tax credit isn't it?

bowlhead99

If you have paid £x into the pension from your own account rather than from your employer's account, you would expect the pension provider to eventually claim £0.25 times x, so that the total amount of money available in your pension for investment is £100 for every £80 you contributed (the tax relief being £20 for every £80 net contribution or £20 for every £100 gross contribution). That is the standard government-agreed incentive for investing inside a pension.

So, it sounds pretty normal to me, and is part of your expectation when you made the pension contribution.

If the figure doesn't bear any relation to the amount of money you contributed in any 'tax month', then query it with the pension provider. However, if it's literally "25% of my initial investment" I don't see why that should be surprising to you or why you would assume it's an error.

Zanderman

You paid 20k (net) into your SIPP.
And 5k has been added. 
Which is as expected (the tax relief).
What, exactly, is your query?
This is, surely, precisely what should have happened.

BrockStoker

Thanks guys. I was aware that if you have an employer, they pay a percentage into your pension. I was just not sure if that was the case with a SIPP seeing as I'm employing myself. When I set up the SIPP I just wanted to get as much cash invested (and in a wrapper). So the 5K extra is a bonus I was not really expecting I must admit, although the thought probably crossed my mind when I set it up(which now seems like an age ago after all that has gone on since the start of the year)!

It is/has been my first opportunity to DIY invest in a pension (a bit late, but better late than never), but I hope to again if I can - currently looking to buy a property, and there should be at least some money left over to invest, as well as more when we sell our current property, so I will try to max out my SIPP first.

MinuteNoodles

I'm guessing you didn't take the time to read how SIPPs work from the provider before you signed up to one? If you're a higher rate tax payer then there's additional tax relief you can claim but you'll need to do it manually as the SIPP provider will only reclaim the basic rate on your behalf.

You do know you can't touch the money in a SIPP until you're 55?

Albermarle

It's a bit worrying that you opened an investment/SIPP whilst not understanding the most basic thing about pensions. Tax relief.
Extract from the I web SIPP front page >
*You will automatically receive 20% in basic rate relief paid to your SIPP. If you are a higher/additional rate tax payer you can then claim an additional 20% or 25% (depending on your tax rate) via your tax return.
This time you have come out OK but with this lack of knowledge you might make a major error at some point . Suggest you have a good look through this link:
https://www.pensionsadvisoryservice.org.uk/about-pensions

BrockStoker

I'm guessing you didn't take the time to read how SIPPs work from the provider before you signed up to one?

You've got me there - yes.

If you're a higher rate tax payer then there's additional tax relief you can claim but you'll need to do it manually as the SIPP provider will only reclaim the basic rate on your behalf.

I've never been a higher rate tax payer.

You do know you can't touch the money in a SIPP until you're 55?

Yes, I was aware of that, thanks.

2unlimited91

So you have made a personal pension contribution of £25k (including the tax relief). This counts as being in the 2019-2020 tax year (because that's when you contributed £20k, despite the tax relief arriving later).

Did you earn (from employment and/or self-employment) at least £25k before tax in 2019-2020? Because if not, you have claimed too much tax relief. You should also take into account any other personal pension contributions you've made (but not any employer contributions, nor any contributions via salary sacrifice).