SIPP Carry Forward - different provider?

BiggaThanBen

I opened SIPP with H&L on 15 April 2020 with £1 deposit.

1) Can I now utilise allowance (£40k pa as director) for the past 3 years by opening another SIPP with e.g. II or Vanguard (due to H&L being the most expensive, I just already had account with them) ?

2) As I understand one can only contribute to a historical year once, can my company still make yearly contrubitions at different times e.g.:
Nov 22 - £39999 - for 20/21 year
Dec 22 - £80000 - for 21/22 and 22/23 years? Alternatively can this second payment be made next tax year ?

Thanks

Dazed_and_C0nfused

Nov 22 - £39999 - for 20/21 year
Dec 22 - £80000 - for 21/22 and 22/23 years?

You (or your employer) can never contribute for 20/21 or 21/22.

Carry forward simply allows additional contributions to be made in (and therefore for) the current tax year.

BiggaThanBen

Perhaps I should have used from, not sure it makes much difference in the context of the question.

I am trying to understand this rule, what is the practical meaning of it, does it limit how I split the additional contributions in this year?

3.  You must use any unused annual allowance from the earliest year first (you can only go back three years) and can only use it once. This means it can only be used once and if fully used for a previous tax year, cannot be used a second time.

Dazed_and_C0nfused

Points of interest in this might be worth a read,

https://www.mandg.com/pru/adviser/en-gb/insights-events/insights-library/annual-allowance-carry-forward

As I understand one can only contribute to a historical year once

Where have you got that understanding from?

Apodemus

With regard to HL's SIPP charges, since these are capped (at £200 pa) does it not make more sense to maximise having everything in the one SIPP?

ColdIron

HL's fees are capped for investment trusts, company shares. ETFs, VCTs, gilts and bonds but not for funds (Unit Trusts, OEICs etc) so the charges will depend upon what you invest in

https://www.hl.co.uk/pensions/sipp/charges-and-interest-rates

Malthusian

There is no rule that says you can only carry forward allowance from each tax year once and no need to open a separate SIPP. (Unless you want to reduce costs, natch.)
Contributions use up allowance from the current tax year first (2022/23), then you jump back to three years ago, then two years ago, then one. (2019/20, 2020/21, then finally 2021/22.) It makes no difference whether you use up all the allowance at once with one big contribution or go into HL's Anchor Road office every day with a bag of pennies. 

2) As I understand one can only contribute to a historical year once, can my company still make yearly contrubitions at different times e.g.:

Nov 22 - £39999 - for 20/21 year
Dec 22 - £80000 - for 21/22 and 22/23 years? 

*belated edit* BiggaThanBen has pointed out that the picture below only applies if he had a private pension open in 19/20.

 No. The Nov 22 contribution would use up £39,999 from the current tax year. So your available annual allowance would then be:

• 19/20: £40,000
• 20/21: £39,999
• 21/22: £40,000
• 22/23: £1

Then after paying another £80,000 the picture would be:

• 19/20: £0 
• 20/21: £0
• 21/22: £40,000
• 22/23: £0 

You first take £1 from 22/23, then £40,000 from 19/20, then £39,999 from 20/21.
Does your company have sufficient profits in the current company year to make these contributions relievable against Corporation Tax?

Exodi

Apodemus said:

With regard to HL's SIPP charges, since these are capped (at £200 pa) does it not make more sense to maximise having everything in the one SIPP?

ColdIron said:

HL's fees are capped for investment trusts, company shares. ETFs, VCTs, gilts and bonds but not for funds (Unit Trusts, OEICs etc) so the charges will depend upon what you invest in

https://www.hl.co.uk/pensions/sipp/charges-and-interest-rates

And to add to ColdIrons correct and useful comment, if you scroll down you can see HL charge up to £11.95 for each investment instruction into an ETF, whereas funds (unit trusts, OEIC's, etc) have no dealing charge.

Therefore, an investor, contributing monthly into multiple funds, is unlikely to want to invest in ETF's as he would get absolutely crucified by dealing charges. I personally add about £750 to my SIPP every month split across 6 funds. If I invested directly into ETF's, I'd face £71.70 in dealing charges... nearly 10% of my contributions! 

What some people do, is investment monthly into a fund at no dealing charge - then when they amass a sizeable holding, sell it and buy an equivelant ETF, incurring one dealing charge. Holding ETF's becomes cheaper at a portfolio size of £44.4k+ if you are able to mitigate the dealing charge.

BiggaThanBen

Thanks, it is clear now.

I can chose any provider and can make contributions in with any amounts as long as it does not exceeded this and previous 2 years' unused allowances. Don't  think I can use 19/20 as SIPP was opened after 6 apr 20 and I didn't have any other pension scheme then.

I should have some retained profit from last year and also want to split these contributions into 2 company years, will check with accountant regardless.

Will also re-check HL fees, but last time I looked II was about twice cheaper.

Exodi

BiggaThanBen said:

Will also re-check HL fees, but last time I looked II was about twice cheaper.

Which would be no suprise on a decent sized portfolio. I think these responses were primarily aimed at Apodemus's blanket suggestion that HL's SIPP charges were limited at £200.

HL is famously expensive.

ColdIron

Exodi said:

Apodemus said:

With regard to HL's SIPP charges, since these are capped (at £200 pa) does it not make more sense to maximise having everything in the one SIPP?

ColdIron said:

HL's fees are capped for investment trusts, company shares. ETFs, VCTs, gilts and bonds but not for funds (Unit Trusts, OEICs etc) so the charges will depend upon what you invest in

https://www.hl.co.uk/pensions/sipp/charges-and-interest-rates

If I invested directly into ETF's, I'd face £71.70 in dealing charges... nearly 10% of my contributions!

What most people investing monthly into ETFs (or ITs or shares etc) would do is use the monthly savings facility with a transaction charge of £1.50 for a much more reasonable £9

Of course your chosen investments would need to be on their list of available securities but there are nearly 1,000 of them so chances are high. You might even find this cheaper than going via funds (£11.95 / £1.50 =7.96), certainly it would involve less complication

You could halve the charges by staggering the payments across 2 months. Investments 1-3 in month 1, 4-6 in month 2 etc so 0.60% of your contributions. There are many ways of skinning a cat