Maximum I can pay into my SIPP before 6 April 2024

markjamesallen

I'm 61 years old and  self-employed and I am planning to end my business on 5/4/24. My accounting year end is 31/7. Normally, I would use my net profit from my accounts 1/8/22 to 31/7/23 to find the maximum I can pay into my SIPP. (For the last 5 years I have paid the maximum into my SIPP as my wife has enough income to support us both). As I am ending my business on 5/4/24 I will prepare my final accounts from 1/8/22 to 5/4/24 (20 months). How do I calculate the maximum I can pay into my SIPP by the 5/4/24? I will be in drawdown from 6/4/24 taking £12570 per annum until I reach state pension age. Thank you.

Dazed_and_C0nfused

Will you have overlap relief to claim on your final period of self employment?

Marcon

Assuming you are self employed (as opposed to trading through your own limited company), then you can pay in a maximum of £60,000 for the tax year 2023/24, including tax relief, so you'd pay in £48,000 and the SIPP provider would add basic rate tax relief to your 'pot', with you claiming any higher rate relief via self assessment. That assumes you have the necessary profits in the tax year to cover such a contribution, and takes into account anything you might already have paid in since 6 April 2023.

You could pay in more if (a) you have any available carry forward https://www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/carry-forward and (b) your profits during the tax year would cover all your contributions in the tax year.

markjamesallen

Dazed_and_C0nfused said:

Will you have overlap relief to claim on your final period of self employment?

I haven't got my head around overlap relief yet.
I will have 12K net profit year to 31/7/23 and 10K net profit 1/8/23 to 5/4/24
So in any other year I would be paying £9,600 into my SIPP by 5/4/24.

markjamesallen

Marcon said:

Assuming you are self employed (as opposed to trading through your own limited company), then you can pay in a maximum of £60,000 for the tax year 2023/24, including tax relief, so you'd pay in £48,000 and the SIPP provider would add basic rate tax relief to your 'pot', with you claiming any higher rate relief via self assessment. That assumes you have the necessary profits in the tax year to cover such a contribution, and takes into account anything you might already have paid in since 6 April 2023.

I am self-employed. My question relates to the 20 month accounting period. Can I get full tax relief on all of the net profit for the 20 months or only on 12/20 of the net profit?

markjamesallen

Spent the morning calling Pension wise, Hargreaves Lansdown and Inland Revenue.

Pension wise suggested I called Inland Revenue
HL just gave the standard answers but said anything else was advice and they couldn't help me, despite me wording my question generically.
Inland Revenue - on hold for 1hr 14 mins and a message said please try again and cut me off.

Three chocolate teapots.

I will pay an accountant to answer my simple question

Dazed_and_C0nfused

markjamesallen said:

Spent the morning calling Pension wise, Hargreaves Lansdown and Inland Revenue.

Pension wise suggested I called Inland Revenue
HL just gave the standard answers but said anything else was advice and they couldn't help me, despite me wording my question generically.
Inland Revenue - on hold for 1hr 14 mins and a message said please try again and cut me off.

Three chocolate teapots.

I will pay an accountant to answer my simple question

I think the answer is going to be that you can get relief on your taxable profit.

What that profit will be will depend on the overlap relief claimed on the self employment pages of your 2023-24 tax return.

markjamesallen

I think the answer is going to be that you can get relief on your taxable profit.

What that profit will be will depend on the overlap relief claimed on the self employment pages of your 2023-24 tax return.

My dilemma is that I need to pay into my SIPP no later than 5/4/24 and the earliest I can send in my 23-24 tax return is 6/4/24. I really need to fully understand the overlap relief.

Dazed_and_C0nfused

markjamesallen said:

I think the answer is going to be that you can get relief on your taxable profit.

What that profit will be will depend on the overlap relief claimed on the self employment pages of your 2023-24 tax return.

My dilemma is that I need to pay into my SIPP no later than 5/4/24 and the earliest I can send in my 23-24 tax return is 6/4/24. I really need to fully understand the overlap relief.

This might help.

https://www.gov.uk/guidance/get-your-overlap-relief-figure