Can rental income be paid into my Sipp

plumb1_2

Due to deciding to cut down on work, only working 3 days a week now, ( self employed, so choose which days I do). my gradual slowdown until I retire next year.
 So my income has reduced but enough to not worry about bills etc. I also get about £10k rental income  which I want to pay into my sipp. Is this allowed?

Marcon

You can't pay rental income into a SIPP - or more accurately it doesn't count as 'earned income' so you wouldn't get tax relief on it, always assuming your SIPP provider accepts contributions which are non-tax relievable.

QrizB

plumb1_2 said:

Due to deciding to cut down on work, only working 3 days a week now, ( self employed, so choose which days I do). my gradual slowdown until I retire next year.
 So my income has reduced but enough to not worry about bills etc. I also get about £10k rental income  which I want to pay into my sipp. Is this allowed?

You can pay your self-employed income into your SIPP, then spend your rental income.

(Of course once it hits your bank account it doesn't matter which particular pound came from where, so long as your gross contribution to your SIPP doesn't exceed the amount you easrned by self-employment.)

Dazed_and_C0nfused

I would say you can pay your rental income into a SIPP if you wish.

But the amount you can contribute would be limited to £3,600 (gross) or your taxable self employment profit if that's higher.

You wouldn't be able to pay in the amount of your taxable self employment profit and your rental income.

plumb1_2

Thanks for the replies 
one more question, if I earn £20k round figure profit this tax year. Can I pay the £20k into the sipp. Or is it a lower figure after I have paid NI and tax say £15k

Dazed_and_C0nfused

one more question, if I earn £20k round figure profit this tax year. Can I pay the £20k into the sipp. Or is it a lower figure after I have paid NI and tax say £15k

Neither.  You can pay £16,000 and the pension company will add £4,000 in basic rate tax relief.

It's based on your pensionable earnings i.e. taxable profit or (taxable) pay from an employment.  Rental income or pension income don't count as pensionable earnings.

plumb1_2

Dazed_and_C0nfused said:

one more question, if I earn £20k round figure profit this tax year. Can I pay the £20k into the sipp. Or is it a lower figure after I have paid NI and tax say £15k

Neither.  You can pay £16,000 and the pension company will add £4,000 in basic rate tax relief.

It's based on your pensionable earnings i.e. taxable profit or (taxable) pay from an employment.  Rental income or pension income don't count as pensionable earnings.

Yes I understand rental income is not allowed or included in my earned income as explained earlier.
 But if I earn 20k why can I only pay 16k, 

Nebulous2

The total contribution is £20k, including the tax relief, which is counted towards it. 

Linton

You are paying taxed money into your SIPP so HMRC add on the missing 20%.  The fact that you did not pay tax on it all is a bonus.

plumb1_2

Thanks for the replies, so what ever amount I earn I just deduct 20% and that’s the max amount I can pay into the sipp.

Dazed_and_C0nfused

plumb1_2 said:

Thanks for the replies, so what ever amount I earn I just deduct 20% and that’s the max amount I can pay into the sipp.

Assuming it doesn't exceed the annual allowance and you haven't made any earlier contributions in the same tax year then yes.