Making SIPP contributions from DB pension payments

moneysaver8

I have a defined benefit pension that pays me £25,000 a year.
Can I use the payments from this to pay into a separate SIPP and then claim basic tax relief on them?

Pat38493

moneysaver8 said:

I have a defined benefit pension that pays me £25,000 a year.
Can I use the payments from this to pay into a separate SIPP and then claim basic tax relief on them?

According to my understanding, you could only do this if you have employment income from an actual employment that is equal to or greater than the amount you pay into the SIPP (although I'm sure someone will clarify that you can do this with some small amount - I think it's about £2880 per year - even if you don't have an employment).

DB payments doesn't count as income and you have to have income to take the contributions from (above the small limit mentioned above).

Albermarle

As above, only earned income counts when looking at eligibility for tax relief.
If you have no earned income, the maximum you can contribute to a pension is £3600 gross . This means £2880 from you and £720 tax relief added by the pension provider. As you are already a taxpayer, you, will pay tax on 75% of it when you withdraw it, then the overall tax benefit is only £180 minus small amount of pension fees. 

moneysaver8

Thanks both.