SIPP advice

proudgecko

thanks
second part - of course it does - spent so long trying to understand tax on interest recently, I've forgotten at how tax on income works - will revisit my tax calculations

AlanP_2

What is the £7k income?

The reason I ask is the £3600 gross pension limit is for non-earners NOT non- taxpayers, if you work and earn £7k you can put that into a SIPP, gross, and get tax relief.

proudgecko

Thank you , I must have misunderstood when reading up on SIPPs - thought the £3600 max was for non tax payers
Will have to see if I’ve got any more spare cash to deposit

Albermarle

proudgecko said:

Thank you , I must have misunderstood when reading up on SIPPs - thought the £3600 max was for non tax payers
Will have to see if I’ve got any more spare cash to deposit

It is a common mistake, some of the info about it, including from HMRC, is less than clear.

The £3,600 is for non earners, which is not the same as a non taxpayer.

JakeHyde

proudgecko said:

Newbie here, who has no real knowledge of investing and low risk tolerance
I have virtually no income other than my savings
Heard a bit about SIPPs and have been told I should put money in a SIPP to get tax relief back - but I don't pay tax except potentially a little on my savings, so not sure I understand how I can get tax relief
I right in thinking I can contribute a maximum of £2880 pa, and get £720 tax relief?

I do have a pension pot with Standard Life, which I am not adding to, nor drawing from
I'm very wary of investing as its outside my knowledge and I have low risk tolerance
Is there a way of putting money into a cash SIPP
It feels like if I can get effectively 25% tax relief, that's a good return without any profits from investing or interest from saving

Any guidance on SIPPs would be very welcome

Wow, you sound like you are in a similar position to me! I'm currently surviving on interest/savings.  I have no real income, so only qualify to put in £2880.

I litrally just posted something like this: https://forums.moneysavingexpert.com/discussion/6518629/whats-the-advantage-of-a-sipp/p1

Depending on how old you are, have you considered a Cash L-ISA, but you can only open one until you are 39 (or 40?)

Other than that, RE: Investing, it's not as scary as you might think. Almost everyone I know confuses investing with trading, they are totally different animals. It might be worth looking into the S&P500 (the 502 biggest companies in the USA), and understanding how it works, and it might not be that daunting.  Heck maybe even just throw a couple of hundred quid on the S&P500 (via an ISA on InvestEngine?), if anything, to get a handle on it. (not financial advice). 

threlkeld53 said:

Yes, you're correct about the '£2880'. Many people on here do the same. If you have no income, it's a good way of earning a free £720 for a bit of online work.


For example, you pay into a SIPP £2880 on say 1st-4th May. Keep it there in cash. On 21st June HMRC will add 25% tax relief of £720, turning it into £3600. On the same day, you crystalize this amount and request the £900 tax free element (25% of £3600). You also request the balance of £2700 which will be paid to you 28th July. 

So basically you laid out £2880 and received £3600 back. All done in a 12 week turnaround.

Whatever you said there, sounded very interesting and cool...  I didn't understand it all, but I want to.  That's the second time I've read someone say 'Crystalize'..  What does that mean?

Can you only do this if you're over 55?  I'm 46, so I don't know if I can be so creative with my cash. I was honestly just going to open a SIPP with InvestEngine tomorrow, and invest in the S&P500, or a Global Index Fund 🤷🏻‍♂️

Teach me everything you know in 500 words or less...GO!  🤣

Albermarle

Whatever you said there, sounded very interesting and cool...  I didn't understand it all, but I want to.  That's the second time I've read someone say 'Crystalize'..  What does that mean?
Can you only do this if you're over 55?  I'm 46, so I don't know if I can be so creative with my cash. I was honestly just going to open a SIPP with InvestEngine tomorrow, and invest in the S&P500, or a Global Index Fund 

You will not be able to withdraw from the pension until you are 57/58, so until then you do not have to worry about crystallisation.

Hopefully you will be OK opening a SIPP today as it is the last day of the tax year.

Beddie

JakeHyde said:

proudgecko said:

Newbie here, who has no real knowledge of investing and low risk tolerance
I have virtually no income other than my savings
Heard a bit about SIPPs and have been told I should put money in a SIPP to get tax relief back - but I don't pay tax except potentially a little on my savings, so not sure I understand how I can get tax relief
I right in thinking I can contribute a maximum of £2880 pa, and get £720 tax relief?

I do have a pension pot with Standard Life, which I am not adding to, nor drawing from
I'm very wary of investing as its outside my knowledge and I have low risk tolerance
Is there a way of putting money into a cash SIPP
It feels like if I can get effectively 25% tax relief, that's a good return without any profits from investing or interest from saving

Any guidance on SIPPs would be very welcome

Wow, you sound like you are in a similar position to me! I'm currently surviving on interest/savings.  I have no real income, so only qualify to put in £2880.

I litrally just posted something like this: https://forums.moneysavingexpert.com/discussion/6518629/whats-the-advantage-of-a-sipp/p1

Depending on how old you are, have you considered a Cash L-ISA, but you can only open one until you are 39 (or 40?)

Other than that, RE: Investing, it's not as scary as you might think. Almost everyone I know confuses investing with trading, they are totally different animals. It might be worth looking into the S&P500 (the 502 biggest companies in the USA), and understanding how it works, and it might not be that daunting.  Heck maybe even just throw a couple of hundred quid on the S&P500 (via an ISA on InvestEngine?), if anything, to get a handle on it. (not financial advice). 

threlkeld53 said:

Yes, you're correct about the '£2880'. Many people on here do the same. If you have no income, it's a good way of earning a free £720 for a bit of online work.


For example, you pay into a SIPP £2880 on say 1st-4th May. Keep it there in cash. On 21st June HMRC will add 25% tax relief of £720, turning it into £3600. On the same day, you crystalize this amount and request the £900 tax free element (25% of £3600). You also request the balance of £2700 which will be paid to you 28th July. 

So basically you laid out £2880 and received £3600 back. All done in a 12 week turnaround.

Whatever you said there, sounded very interesting and cool...  I didn't understand it all, but I want to.  That's the second time I've read someone say 'Crystalize'..  What does that mean?

Can you only do this if you're over 55?  I'm 46, so I don't know if I can be so creative with my cash. I was honestly just going to open a SIPP with InvestEngine tomorrow, and invest in the S&P500, or a Global Index Fund 🤷🏻‍♂️

Teach me everything you know in 500 words or less...GO!  🤣

'Crystalize' means starting to take the pension out, in simplest terms.