SIPP Help.

Bluebird09

Hi all,

Hubby's yearly pension is £8,492.40. He transfers £1,260 of his personal allowance to me via marriage allowance tax.
If he were to transfer £2,880 to a SIPP this would take him to £12,632.40. Does this mean it's not worth his while as he would be taxed and woudn't receive the £750?
Sorry if this is a stupid question.  

molerat

How does paying IN to a pension affect his income or tax allowance ?

I am not sure where your thinking is going - none of those numbers have any relevance to each other.

If he has an income of £8942 and a tax allowance of £11310 he has another £2359 tax allowance spare.

He can pay £2880 into a SIPP and get £720 added to it by the tax man

He can take £3600 out of that SIPP and pay tax on £341 of it - giving £68.20 of that £720 back to the taxman.

Dazed_and_C0nfused

Bluebird09 said:

Hi all,

Hubby's yearly pension is £8,492.40. He transfers £1,260 of his personal allowance to me via marriage allowance tax.
If he were to transfer £2,880 to a SIPP this would take him to £12,632.40. Does this mean it's not worth his while as he would be taxed and woudn't receive the £750?
Sorry if this is a stupid question.  

What is this "yearly pension"?

If it's the State Pension then please make sure you have calculated it correctly.

A very common error by people posting on this forum is they take the regular (State) Pension payment and multiply it by 12.

But the State Pension cannot be paid monthly, it's occasionally weekly but usually 4 weekly.  So 13 payments a year not 12.

As @molerat has explained your figures don't make any sense.

If he intends adding £3,600 (gross) and taking the whole lot out in the same tax year then he could potentially make a profit of £720.

Bluebird09

Sorry for late reply. Hubby's pension is a personal work pension through ill health retirement, and thank you both, I think I understand now. It's too late to contribute for this tax year right, and he wouldn't have time to withdraw in time?

Dazed_and_C0nfused

Bluebird09 said:

Sorry for late reply. Hubby's pension is a personal work pension through ill health retirement, and thank you both, I think I understand now. It's too late to contribute for this tax year right, and he wouldn't have time to withdraw in time?

It definitely isn't too late to contribute this tax year.

But it will be tight to contribute and take a payment out, particularly as not all pension providers pre fund the tax relief, you often have to wait a few weeks for this to be credited as HMRC won't pass it to the pension company for a few weeks.

dunstonh

A lot of providers hit their drawdown deadline this week, if invested, but the following week if in cash.