SIP as relevant earnings for pension contributions

RoysV

I recently retired and had a SIP (Share Incentive Plan) upon leaving I sold the shares and had to pay tax as required as I hadn't had them 5 years.
Are they classed as relevant earning so I can top my SIPP up if I want?

artyboy

It's an interesting question as disposal of shares wouldn't normally be considered relevant earnings - but you have paid income tax on them. 

I don't know the answer to that one I'm afraid, but there's potentially a much more significant issue - if you did actually retire, and that was recognised by your employer, you should have been classed as a 'good leaver', with no income tax due on the shares - the would all have come out of the SIP at the point you left and been free to sell. Official guidance below. 

https://www.gov.uk/hmrc-internal-manuals/employee-tax-advantaged-share-scheme-user-manual/etassum28160

najan49

RoysV said:

I recently retired and had a SIP (Share Incentive Plan) upon leaving I sold the shares and had to pay tax as required as I hadn't had them 5 years.
Are they classed as relevant earning so I can top my SIPP up if I want?

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/372569/sip-info-employees.rtf

If your shares come out of the plan because you leave the company for any of the following reasons income tax or NICs will not be payable on their value 

1. injury or disability 

1. redundancy 

1. the company or part of the business you work for is sold out of the group 

1. retirement 

1. death. 

artyboy

...of course, given that enforced retirement is no longer a 'thing' - at least for most jobs, the devil will be in the detail of how this is defined by the OP's former employer and what is specified in their SIP trust deed (or equivalent) - but if this is genuine retirement then it's still provided for in the regs.

(it was easier in my case as I got my SIP shares released under a VR settlement, which is a lot more black and white)

Marcon

There's a full list here of what counts as 'earnings that attract tax relief' [when contributing to a pension]; https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100#qualifying

It refers to 

• amounts taken off pay to buy partnership shares in a share incentive plan in line with paragraph 83 of Schedule 8 of Finance Act 2000

but that doesn't sound as if it applies to you.

Try asking the question using https://community.hmrc.gov.uk/customerforums/

RoysV

Thanks for all the answers. I should have said although I have retired I'm 56 so I guess it wouldn't count as 'proper' retirement for want of a better description?
To be fair I'm not overly concerned about topping the SIPP up I was just wondering if anyone could shed any light on as I'd searched and couldn't really find anything definite.
Thanks again for the answers

Marcon

RoysV said:

Thanks for all the answers. I should have said although I have retired I'm 56 so I guess it wouldn't count as 'proper' retirement for want of a better description?
To be fair I'm not overly concerned about topping the SIPP up I was just wondering if anyone could shed any light on as I'd searched and couldn't really find anything definite.
Thanks again for the answers

If you've permanently ceased all forms of gainful employment, then you've retired. The difficulty would be proving to HMRC that you definitely won't be taking up any form of paid job in the future. It would be worth asking your original question, plus that point, on https://community.hmrc.gov.uk/customerforums/ (seems to get quite a prompt response from HMRC and you don't have to spend hours trying to get through on the phone to them).

RoysV

I've tried registering on there but don't seem to be able to.
Just one other question if I may. As my earnings this tax year wont reach my personal allowance would the tax paid on the SIP be repayable anyway?