Why use a SIPP and workplace pension together?

isayhello

csgohan4 said:

bare in mind if your work pension is DB and you add in a SIPP, if your a 40% tax earner, it could messy calculating the AA, especially if your a high earner. 

Sorry, what is the AA?

It's not a DB pension, just regularly contributions but I don't know if it's net pay yet for sure or not. I take it that if it's net pay then I don't need to claim any more relief.

AlanP_2

isayhello said:

csgohan4 said:

bare in mind if your work pension is DB and you add in a SIPP, if your a 40% tax earner, it could messy calculating the AA, especially if your a high earner. 

Sorry, what is the AA?

It's not a DB pension, just regularly contributions but I don't know if it's net pay yet for sure or not. I take it that if it's net pay then I don't need to claim any more relief.

AA is Annual Allowance. In simple terms there are 2 limits on pension contributions. The first is annual salary and the second is the AA which is £40k per year. The AA calculation for a DB scheme is more complicated than for a DC scheme.

For most people that's it but it is further complicated by being allowed to carry unused AA forward for 3 years, the £40k is reduced for very high earners and for those who have accessed any taxable income from a DC pension.

If you look at a payslip you should be able to work out the approach your employer is using for tax - does the Gross Salary = the Taxable Pay.

Another check is to look at the online pension account if you can. Is tax relief being added there in addition to the monthly payroll deductions once they are paid to the provider? 

isayhello

AlanP_2 said:

AA is Annual Allowance. In simple terms there are 2 limits on pension contributions. The first is annual salary and the second is the AA which is £40k per year. The AA calculation for a DB scheme is more complicated than for a DC scheme.

For most people that's it but it is further complicated by being allowed to carry unused AA forward for 3 years, the £40k is reduced for very high earners and for those who have accessed any taxable income from a DC pension.

If you look at a payslip you should be able to work out the approach your employer is using for tax - does the Gross Salary = the Taxable Pay.

Another check is to look at the online pension account if you can. Is tax relief being added there in addition to the monthly payroll deductions once they are paid to the provider? 

@AlanP_2 it's hard to work it out from the payslip, the gross does = the taxable pay but in the earnings section, the basic pay has a deduction of pension in the same box, then below that it has this figure as earnings, with tax an NI deductions in a separate box. So it's confusing to know if the pension was taken out first then the tax on that figure or on the basic pay figure.

underwhelmed_saver

isayhello said:

underwhelmed_saver said:

For me I've moved all of my previous defined-contribution pensions into a SIPP.

I also contribute monthly to the SIPP alongside my workplace pension, which I contribute enough for the max employer contribution  (me 2%, employer 5%)

I would contribute more to the workplace one, but they don't offer salary sacrifice so the contributions get taken out after tax. I find it easier to just top up my SIPP instead with a regular monthly amount.

So with your SIPP when you're adding money to it, as I understand it the SIPP provider should be topping this up with 20% tax relief correct? so for every £8 you add, it's actually adding £10? Have I got that right?

What is the deal if you're a higher rate earner, is it a hassle to try and claim the extra relief?

Yes the SIPP provider claims the 20% tax relief on my behalf, it takes about 2 months or so for the money to arrive into the account.

I claim the extra relief through self assessment.

isayhello

underwhelmed_saver said:

Yes the SIPP provider claims the 20% tax relief on my behalf, it takes about 2 months or so for the money to arrive into the account.

I claim the extra relief through self assessment.

Thanks do you do SA just for this or because you're self employed?