Limitations on New Pension Tax Relief after Pension Drawdown -

chlove

I started drawdown from SIPPs some years ago, and am therefore limited to a maximum annual contribution of £4,000 to any new SIPP,  providing I earn at least £4,000 per annum. This attracts £1,000 in income tax relief for any 20% tax payer, like me, making £5,000 in all. If I draw 25% as a tax free lump sum, I will pay 20% tax  of  £750.on the remaining £3,750, which parlays £4,000 into £4,250, or a tax rebate of  £250 . If the SIPP is entirely invested in cash, and lcashed in as soon as the fund is established, there is no risk of loss, except for any admin fees or charges. A low cost provider like Fidelity charges < 0.5% or  £25. Done once per annum each, for myself and my wife, this yields at least £425 in tax rebates per annum.,
I believe the rules change from age 75 on, but now aged 65, is there anything preventing me from doing this annually for the next decade?

Dazed_and_C0nfused

You should only be contributing £4,000 gross i.e. £3,200 from you plus £800 basic rate tax relief.

Probably just terminology but there is no tax "rebate" as such.  Using your figures you handed over £4,000 to the pension company and received £4,250 back (£1,250 TFLS and £3,000 pension.

The figures should really be you hand over £3,200 and receive £3,400 (£1,000 TFLS and £2,400 pension).

This is the 6.25% often referred to on the pensions board (£3,200 becomes £3,400)

Dazed_and_C0nfused

The £4,000 limit is mentioned here in the continue to pay in section

https://www.pensionwise.gov.uk/en/take-whole-pot

dunstonh

This attracts £1,000 in income tax relief for any 20% tax payer, like me, making £5,000 in all

No it doesnt.

The maximum contribution you can make is £4000.  Not £5000.  Do not make the mistake of thinking that tax relief is a bonus. It is not. It is a relief.    Relief reduces the gross figure.  They do not get added to it.

chlove

Thanks for clarifying this -  I've had great difficulty in finding an explicit statement by HMRC clarifying that the 4,000 limit includes any tax relief. 

Dazed_and_C0nfused

Have a look at Meaning of total contributions in this link,

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044220