Can £10,000 p.a. now be recycled through a SIPP to avoid both income tax and employerNI?

BobWelham

Thanks, Linton.

No cut in John's salary is involved and it remains comfortably above minimum wage.
John's £10,000 p.a. employer SIPP contributions are not new, and historically they have in fact been higher.
What has changed is the new £10,000 annual contribution limit which now tempts John to forego future employer contributions above £10,000 p.a. in exchange for a £10,000 p.a. increase of his present day income taxed at only 15%.
This trade-off was not attractive when the limit was £4,000.

John wants to preserve the capital value of his SIPP as far as possible and leave it to his children free of IHT.
Hence he has not taken any TFLS yet and intends to do so only piecemeal in 25/75 proportion with taxed withdrawals.

I was not aware of the £7,500 TFLS ceiling over 2 years, and thanks for the heads up. This allows up to an annual £10,000 in / £15,000 out cashflow which would erode the capital value of the SIPP by an acceptable £5,000 p.a.