Approaching retirement age - stuff ISA savings into our SIPPs?

trevjl

Do you mean an extra £23,000?

yes, well, that's what I thinking, hence asking here for clarification. To make myself clear.

If I have paid in, in round figures £17K combined me & employer and earnt £49K I would be able in theory to take £23K from my ISA and put it in my DC ?  Sorry if I am being a bit thick.

Just rereading the above posts, I do not think you actually mention how your regular contributions are made now, as that can make a difference. 

Currently contributions by Net Pay, SS not available with my employer, no idea why, I mean they are only a 2.1 billion cap company living in 1975

AlanP_2

I would contribute the amount required to reduce your taxable / P60 income figure down to your tax allowance level. So like you, using round figures:

Salary = £49k

Tax Allowance = £12.5K

Current PERSONAL / EMPLOYEE contributions = £nK (employer contributions don't count to income limit)


New contribution = (49k - 12.5k) - nK


The balance, approx £12.5k, can then be added as a GROSS CONTRIBUTION (net = £10k) to a Relief at Source personal  pension scheme thus getting £2.5k tax relief even though no income tax has been paid on this portion of income.


Needs checking against Annual Allowance limit, but if previous 3 years contributions have all been around £25-30k (INCLUDING employers contribution for this calculation) then you should be fine.

trevjl

Sorry, that has gone right over my head no matter how many times i read it.
If it matters or makes any difference, my current contribution is 20% and my employer pays a paltry 6.5% (even worse for new joiners).

Secret2ndAccount

Let me see if I can translate.
You can earn 12,570 in a year before you pay any tax at all. Your salary is 49k. He's suggesting you pay 37k into your pensions. 49k-37k = 12k which is less than 12,570, so you would pay no income tax for the year.
But you can't just write a cheque for 37k and put it in your SIPP. Here are 3 reasons:
1. You are already paying personal contributions into a pension. At 20% and 49k, you are looking at about 9,800 total by next April. So instead of 37k, you should only be paying in about 27k or so.
2. But you don't pay in 27k either. You will get tax relief added to whatever you pay in. So multiply by 0.8     0.8 * 27k = 21,600. That's what you pay in, and it gets topped back up to 27k
3. There is a limit. It's called the annual allowance. For most people that is 40k per year. That's the grand total of all contributions to your pensions. That includes your employer's contribs too. Add it all up, and it's possible you tip just over the 40k limit. That's okay. For the annual allowance, you can look back up to 3 years, and bring forward any unused annual allowance and add it to this year's. So it seems likely that you are safe, even if your contribs total over 40k for a few years.

Is that any clearer?  Please plug in your own numbers, by looking at your payslips and pension statement. Based on your OP it would be okay to put in about 21k as calculated above.

trevjl

Yes thank you very much, that is now clear.
So it seems I am OK to take whatever I decide to from my SS ISA up to about £21K or thereabouts depending on the figure once I have put in my own figures and the consensus is that it is a good idea as it is likely to be my last full tax year of earnings