SIPP contributions / uk relevant earnings / pension options

mb6000

Hi, I am a UK resident and work as a seafarer, age 46, all my earnings qualify for the seafarers earnings deduction (SED), meaning they are not subject to income tax. I have a SIPP with Vanguard, and for the last 5 or so years have only ever paid in a max of 2880 per year, which is then grossed up to the 3660 limit.
Q - can I pay in more than this? I have the spare cash to do so (from my seafarer earnings), but thought that as my earnings are subject to SED I can't use these earnings to put into my SIPP.
Q - if I can't pay in more than the 2880 which is then grossed up, can I pay in more than that but not have the tax relief, simply to just boost the amount in the SIPP, up to my annual allowance which is currently 40k? So pay in 2880 that is grossed up, then an additional 37,120 that will not be grossed up?
I also pay voluntary N.I. contributions for my state pension one day, and currently max out my S&S ISA every year, and have a few BTL properties.
Q - any other suggestions on how to save for retirement in a pension?
Many thanks.

Albermarle

I presume you can not pay in  more but I am not familiar with SED, so not 100% sure.

Q - if I can't pay in more than the 2880 which is then grossed up, can I pay in more than that but not have the tax relief, simply to just boost the amount in the SIPP, up to my annual allowance which is currently 40k? So pay in 2880 that is grossed up, then an additional 37,120 that will not be grossed up?

Pensions are taxable when you take them ( well 75% of the pot is ) , so putting money in when getting no tax relief is not a good idea. Probably better to save/invest in an ISA.

squirrelpie

"Probably better to save/invest in an ISA."

The OP said he already maxes out his ISA and is looking for extra ways to save.

Dazed_and_C0nfused

Not something I remember being asked about on here before but this suggests that larger contributions would be possible.

https://www.accountingweb.co.uk/any-answers/seafarers-earnings-and-pension-contributions

xylophone

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim33002

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim33053

A pension contribution is shown in the example (it is less than the £2880 that would be permissible for a non earner but there is no suggestion that the seafarer is limited to the amount shown or indeed to what HMRC term "the basic amount)".

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim33053

With regard to "chargeable to tax", a person employed in an occupation other than seafaring might have earnings of £12,570 and no other income, 

His earnings are "chargeable to tax" but he doesn't pay any tax because of the Personal Allowance.

Nevertheless, he could contribute up to £10.056 to his personal pension and receive tax relief up to £2504 even though he never actually paid any tax.

By analogy, the seafarer could make contributions based on on his relevant UK earnings?

Marcon

mb6000 said:

Hi, I am a UK resident and work as a seafarer, age 46, all my earnings qualify for the seafarers earnings deduction (SED), meaning they are not subject to income tax. I have a SIPP with Vanguard, and for the last 5 or so years have only ever paid in a max of 2880 per year, which is then grossed up to the 3660 limit.
Q - can I pay in more than this? I have the spare cash to do so (from my seafarer earnings), but thought that as my earnings are subject to SED I can't use these earnings to put into my SIPP.
Q - if I can't pay in more than the 2880 which is then grossed up, can I pay in more than that but not have the tax relief, simply to just boost the amount in the SIPP, up to my annual allowance which is currently 40k? So pay in 2880 that is grossed up, then an additional 37,120 that will not be grossed up?
I also pay voluntary N.I. contributions for my state pension one day, and currently max out my S&S ISA every year, and have a few BTL properties.
Q - any other suggestions on how to save for retirement in a pension?
Many thanks.

Simpler than some of the links given above: https://reedmanwm.co.uk/article/detail/2021/september/seafarers-earnings-deduction-and-pension-tax-relief .html

mb6000

Albermarle said:

I presume you can not pay in  more but I am not familiar with SED, so not 100% sure.

Q - if I can't pay in more than the 2880 which is then grossed up, can I pay in more than that but not have the tax relief, simply to just boost the amount in the SIPP, up to my annual allowance which is currently 40k? So pay in 2880 that is grossed up, then an additional 37,120 that will not be grossed up?

Pensions are taxable when you take them ( well 75% of the pot is ) , so putting money in when getting no tax relief is not a good idea. Probably better to save/invest in an ISA.

Understand, but when you have maxed your ISA is the SIPP not a good option? Yes you pay tax on 75% of the amount you take eventually, but you do get 25% of it tax free, and there is no capital gains tax to pay on any uplift (I invest only in a global equity fund)

Or, am missing something else here? I do also have a GIA invested in global equities, simply because I can think of no other account (tax advantageous) to use.

mb6000

Marcon said:

mb6000 said:

Hi, I am a UK resident and work as a seafarer, age 46, all my earnings qualify for the seafarers earnings deduction (SED), meaning they are not subject to income tax. I have a SIPP with Vanguard, and for the last 5 or so years have only ever paid in a max of 2880 per year, which is then grossed up to the 3660 limit.
Q - can I pay in more than this? I have the spare cash to do so (from my seafarer earnings), but thought that as my earnings are subject to SED I can't use these earnings to put into my SIPP.
Q - if I can't pay in more than the 2880 which is then grossed up, can I pay in more than that but not have the tax relief, simply to just boost the amount in the SIPP, up to my annual allowance which is currently 40k? So pay in 2880 that is grossed up, then an additional 37,120 that will not be grossed up?
I also pay voluntary N.I. contributions for my state pension one day, and currently max out my S&S ISA every year, and have a few BTL properties.
Q - any other suggestions on how to save for retirement in a pension?
Many thanks.

Simpler than some of the links given above: https://reedmanwm.co.uk/article/detail/2021/september/seafarers-earnings-deduction-and-pension-tax-relief .html

So, after reading this link, that I could potentially contribute 32k, with this being grossed up to 40k, as this is tax relief at source?