How to max out a SIPP in a tax year if you already are paying into an employer pension fund?

MiserlyMartin

Thanks all. I'll be as careful as I can not to go over but if I do manage to do it slightly, it doesn't sound like it will be a huge drama. Does any other income count towards your yearly SIPP limit? For example rental or overseas income (accounted for on your self assessment)

Albermarle

bjorn_toby_wilde said:

I made an accidental overpayment (forgot that there was a time lag of about 4 weeks between Sal Sac leaving my salary and hitting my pension account).

After year end Aviva wrote to me about the overpayment and presumably alerted HMRC. I had to pay the tax back, so yes, it would be picked up I believe. Whether it would be missed if you split the payment across more than one pension provider in the same year I don’t know, but as processes are automated and all linked to your NI number I suspect it wouldn’t.

I think that is a bit unusual.
The OP is talking about adding money to a SIPP which will be a relief at source payment.
The SIPP provider will just add on basic rate tax relief automatically. They have no idea if you are entitled to the tax relief and/or are overpaying. That is for the client to get right.

OP - If you make an overpayment and are aware of it, the best way is just to inform the pension provider asap . They will just unwind your overpayment and pay you and HMRC back. No need to contact the latter in this case.
If you make an overpayment unwittingly, then probably it will get picked up at some point in the future ( could be years) and then you have to interact with HMRC and it could get messy.

Sarahspangles

Albermarle said:

bjorn_toby_wilde said:

I made an accidental overpayment (forgot that there was a time lag of about 4 weeks between Sal Sac leaving my salary and hitting my pension account).

After year end Aviva wrote to me about the overpayment and presumably alerted HMRC. I had to pay the tax back, so yes, it would be picked up I believe. Whether it would be missed if you split the payment across more than one pension provider in the same year I don’t know, but as processes are automated and all linked to your NI number I suspect it wouldn’t.

I think that is a bit unusual.
The OP is talking about adding money to a SIPP which will be a relief at source payment.
The SIPP provider will just add on basic rate tax relief automatically. They have no idea if you are entitled to the tax relief and/or are overpaying. That is for the client to get right.

OP - If you make an overpayment and are aware of it, the best way is just to inform the pension provider asap . They will just unwind your overpayment and pay you and HMRC back. No need to contact the latter in this case.
If you make an overpayment unwittingly, then probably it will get picked up at some point in the future ( could be years) and then you have to interact with HMRC and it could get messy.

I’ve just gone through this, notifying my SIPP provider I went over, and it’s been straightforward. I’m sure HMRC would pick it up eventually as they know your eligible UK earnings and how much tax relief they’ve paid to an RAS scheme.

Exceeding the Annual Allowance is worse. There’s no way to resolve other than by paying a tax charge. 

af1963

If it's just a matter of a £100 bonus that you may or may not get, and won't know about for sure until after year-end, I'd just maximise my contributions during March assuming I won't get it.  It could mean missing out on adding a possible £100 to the pension, but the net benefit of that, after 3/4 of it it is probably taxed at 20% on the way out, could be as little as £6.25 .  Not worth stressing about.