Can I pay into a SIPP

Cariad71

Hello- I’m retired (ill health) and receiving my teachers’ pension. I also have income from a rental. Am I allowed to pay into a SIPP?

Marcon

Cariad71 said:

Hello- I’m retired (ill health) and receiving my teachers’ pension. I also have income from a rental. Am I allowed to pay into a SIPP?

If you're under 75, yes and you'd get tax relief. Unless you have earned income (pensions and rent don't count), you can only pay in £3,600 gross (you pay £2,880 and the provider claims and adds basic rate tax relief on your behalf).

Cariad71

I’m 53- could I do this annually? Could I take it all out in one go? (Whenever I wish)
Thanks

michaels

Cariad71 said:

I’m 53- could I do this annually? Could I take it all out in one go? (Whenever I wish)
Thanks

Yes annually.  Unlikely you could take it out until you are 55 or possibly slightly older depending on the transition date.  When you take it out it will count as income subject to tax, tax payable will depend on your other income

Linton

You can withdraw as much money as you want from a SIPP or similar pension as often as you want once you reach 55.  The age is going up to 57 in 2028 so it looks like you will just be OK.

Cariad71

Thank you! One final question. Can I back date them and pay in for previous years?

Sarahspangles

Cariad71 said:

Thank you! One final question. Can I back date them and pay in for previous years?

Sadly, no. You will see references to something called Annual Allowance and carry forward but that's not relevant unless you have sufficient relevant UK earnings in that year. With no earnings, £3,600 is the limit.

Stringybob3

If your current pension and rent already put you into the basic tax rate, then the benefit in doing this would equate to £180/year (£900 tax free and then £2160 after tax for the remaining). You would therefore need to consider any SIPP charges to see if it is worthwhile doing

Cariad71

Stringybob3 said:

If your current pension and rent already put you into the basic tax rate, then the benefit in doing this would equate to £180/year (£900 tax free and then £2160 after tax for the remaining). You would therefore need to consider any SIPP charges to see if it is worthwhile doing

Yes- I’m a basic rate tax payer. I’m just thinking that paying into a SIPP (6.25% uplift) is better than paying into an ISA at 4-5% But I didn’t realise that there are charges associated with a SIPP. Thank you 

molerat

There usually are no charges for the £2880 in £3600 out cash only SIPP.  Plus you get interest for the time the cash is sitting there - currently 3.25% AER with HL - but will be taxed on withdrawal in the usual 25%/75% way.

Albermarle

Cariad71 said:

Stringybob3 said:

If your current pension and rent already put you into the basic tax rate, then the benefit in doing this would equate to £180/year (£900 tax free and then £2160 after tax for the remaining). You would therefore need to consider any SIPP charges to see if it is worthwhile doing

Yes- I’m a basic rate tax payer. I’m just thinking that paying into a SIPP (6.25% uplift) is better than paying into an ISA at 4-5% But I didn’t realise that there are charges associated with a SIPP. Thank you 

There are usually charges for ISA's as well.