Retirement planning

NSG666

bluenose1 said:

Bobinyorkshire said:

Thank you again for you input.
So, in summary if I earn 30K per annum I could put 30k - 9.3% of 30k ie £27210 x 0.8 =£21768 into a SIPP and this will be enhanced by recovery of tax back to £27210 which could then be taken out in 2 consecutive years tax free after I had finished work as I would not be earning and hence below my personal allowance.
Apologise in advance if I have misunderstood this - needless to say my job in the NHS did not involve finances!!

Just checking you realise it is your net income that you can put into a SIPP. ie after tax etc. If you look at your P60 for last year it will say what your net income was so will give you an idea of how much for this year.

Also if considering taking pension early I would factor in affect of inflation as made a big difference to my calculations and taking pension early doesn’t seem quite as attractive.
If you are no good on spreadsheets I found running the various scenarios though guiide.co,uk helpful.

You can pay up to 100% of your gross income into a pension(s) (£40k limit) but you multiply that by 80% (as Bob has) to work out what you can pay into a SIPP as the SIPP provider claims 20% from HMRC. This is the real beauty of this if you can afford to do it as you get 20% tax relief on the whole lot even though you have only paid 20% tax on (in this case) £30000 - £12570 = £17430 = £3486 tax paid but £6000 claimed back!

Albermarle

bluenose1 said:

Bobinyorkshire said:

Thank you again for you input.
So, in summary if I earn 30K per annum I could put 30k - 9.3% of 30k ie £27210 x 0.8 =£21768 into a SIPP and this will be enhanced by recovery of tax back to £27210 which could then be taken out in 2 consecutive years tax free after I had finished work as I would not be earning and hence below my personal allowance.
Apologise in advance if I have misunderstood this - needless to say my job in the NHS did not involve finances!!

Just checking you realise it is your net income that you can put into a SIPP. ie after tax etc. If you look at your P60 for last year it will say what your net income was so will give you an idea of how much for this year.

Also if considering taking pension early I would factor in affect of inflation as made a big difference to my calculations and taking pension early doesn’t seem quite as attractive.
If you are no good on spreadsheets I found running the various scenarios though guiide.co,uk helpful.

As per the previous post , the statement in bold is incorrect.

bluenose1

Thanks NSG666 and Albermarle. Must have been having a senior moment!!   

Bobinyorkshire

Thank you again for all your helpful comments. Think I’ll probably try to set up a low risk SIPP for the next 2 years and use that money to help bridge the gap until I take the NHS pension which I’ll probably leave a bit longer to ‘mature’ 

Bobinyorkshire

Can I also ask? If I was to invest a lump sum into a SIPP (equivalent to the maximum amount allowed by salary for that year) does it matter at what point in that financially year it is submitted to get the full year’s tax relief? Or do you only get tax relief from the date added and hence only put in a part year’s allowance?

MallyGirl

The tax relief is related to the amount, not the time it has sat there

Bobinyorkshire

And a financial year is April to April presumably? So in this case I could add next years lump sum after April 2022

MallyGirl

Tax (and pension) year is 6th April to the following 5th April so you can make a new year payment in April 2022 (6th onwards)

Dazed_and_C0nfused

You can only ever get tax relief on pension contributions for the tax year you make the contribution in.

Bobinyorkshire

That’s really helpful. I’ll be setting that up soon thanks to all your useful input. Should have found this forum sooner, it’s a wealth of useful stuff