Maximum SIPP contribution of £60k or £48k in a tax year

RemotecUK

I just wanted to get clarification on this information from the pensions guide on this site:

"Taxpaying earners (earning £260,000 or less). Here you can either put 100% of your earnings or £60,000 (whichever's lower) into your pension pot and still get tax relief on the lot."

Is the £60,000 the actual amount an individual can transfer in?

Or is the £60,000 the total amount including the tax reclaimed by the SIPP provider?

The latter would mean the maximum transferrable in a given year from an individuals bank account to their SIPP would be £48,000.

The HL SIPP tax relief calculator informs that if you want a contribution of £60,000 in a given tax year you only need to put in £48,000.

Thanks in advance.

Mark_d

The £60k includes the basic rate tax relief

valueman1

The £60k is gross.  You put in £48k and the government adds 25% so £60k in total.

El_Torro

One thing to note is that if any of that £60k (or £48k, depending on which way you look at it) was subject to 40% Income Tax then you also get tax back from HMRC. 

So assuming you earn exactly £60k in a year and you put it all in your pension you will have paid 40% tax on £9,730 of it. HMRC will give you 20% of the £9,730 back, so £1,946. This £1,946 is just a tax rebate, so you can do whatever you want with it, it doesn't have to go into your pension. 

The above assumes you don't live in Scotland, where the tax bands are different. 

Sarahspangles

RemotecUK said:

I just wanted to get clarification on this information from the pensions guide on this site:

"Taxpaying earners (earning £260,000 or less). Here you can either put 100% of your earnings or £60,000 (whichever's lower) into your pension pot and still get tax relief on the lot."

Is the £60,000 the actual amount an individual can transfer in?

Or is the £60,000 the total amount including the tax reclaimed by the SIPP provider?

The latter would mean the maximum transferrable in a given year from an individuals bank account to their SIPP would be £48,000.

The HL SIPP tax relief calculator informs that if you want a contribution of £60,000 in a given tax year you only need to put in £48,000.

Thanks in advance.

For completeness, if you also have contributions into a DB pension e.g. NHS, other public sector, a sum is netted off the £60k that is equivalent to growth in the pension. Rather than being the actual pension contribution it’s a calculated figure called the Pension Input Amount.

dunstonh

Is the £60,000 the actual amount an individual can transfer in?

£60,000 is the pension contribution.    Pensions are always discussed gross, not net.

Or is the £60,000 the total amount including the tax reclaimed by the SIPP provider?

Tax relief is a reduction, not an addition.   So, the pension contribution is £60,000.

"Taxpaying earners (earning £260,000 or less). Here you can either put 100% of your earnings or £60,000 (whichever's lower) into your pension pot and still get tax relief on the lot."

There is the potential to go above £60k for some in that scenario.  i.e. those earning above £60k or those who can utilise employer contributions.

RemotecUK

"Taxpaying earners (earning £260,000 or less). Here you can either put 100% of your earnings or £60,000 (whichever's lower) into your pension pot and still get tax relief on the lot."

So in this case it would be possible to transfer from an individuals bank account £60,000 and get tax relief on all of it meaning a gross pension contribution of £75,000?

Dazed_and_C0nfused

RemotecUK said:

"Taxpaying earners (earning £260,000 or less). Here you can either put 100% of your earnings or £60,000 (whichever's lower) into your pension pot and still get tax relief on the lot."

So in this case it would be possible to transfer from an individuals bank account £60,000 and get tax relief on all of it meaning a gross pension contribution of £75,000?

Providing they earn at least £75,000.

dunstonh

So in this case it would be possible to transfer from an individuals bank account £60,000 and get tax relief on all of it meaning a gross pension contribution of £75,000?

If they are earning over £75k a year and qualify for carry forward, yes.

Sarahspangles

RemotecUK said:

"Taxpaying earners (earning £260,000 or less). Here you can either put 100% of your earnings or £60,000 (whichever's lower) into your pension pot and still get tax relief on the lot."

So in this case it would be possible to transfer from an individuals bank account £60,000 and get tax relief on all of it meaning a gross pension contribution of £75,000?

You can exceed the £60k Annual allowance by using carry forward BUT you need to have unused AA in relevant earlier tax years in which you were paying into a pension.

RemotecUK

Does this sound correct?

If there is no carry forward and the individual earns £75,001 per annum then the maximum transferrable from a bank account to the SIPP provider is £48,000.