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

NoMore

RemotecUK said:

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.

Not necessarily, has employer made any contributions ? That would reduce the AA available.

"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."

The problem with the above is its trying to conflate to different things and causes people to misunderstand it, unfortunately it has become common as a 'rule' but when you start to get down to it, it starts to fall apart, as each rule has different conditions and different aims.

In reality there are two rules that govern pension contributions:

1) The Annual Allowance (AA) this is the maximum amount that can be contributed from all sources (so you, employer, tax relief) to Pension(s) in a year. This can be extended by up to the last 3 years unused allowance. Breaking the AA results in a AA charge.

2) The Tax relief limit, this means that payments made by relief at source to a pension (where the pension claims basic tax relief for you) are not entitled to more tax relief than based on your relevant uk earnings. Relevant Uk earnings for most people is their salary, it does not count Pension Income, BTL income, dividends and various other things.

Sarahspangles

RemotecUK said:

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.

Yes that sounds right. The Annual Allowance cap is £60,000 this year but that is gross, to achieve that in a SIPP (which is Relief at Source) you contribute 80% of £60,000.

Linton

Sarahspangles said:

RemotecUK said:

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.

Yes that sounds right. The Annual Allowance cap is £60,000 this year but that is gross, to achieve that in a SIPP (which is Relief at Source) you contribute 80% of £60,000.

The £60K limit also includes any employer contributions.  So without carry forward the limit for paying into a SIPP is £48K (increased to £60K by the SIPP provider)  only if you do not receive any pension payments from an employer.

Albermarle

Sarahspangles said:

RemotecUK said:

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.

Yes that sounds right. The Annual Allowance cap is £60,000 this year but that is gross, to achieve that in a SIPP (which is Relief at Source) you contribute 80% of £60,000.

Just to repeat a previous point for clarity. The £60K limit includes any employer contributions.
So with no carry forward, the limit is £60K minus any employer contributions.

Linton

Albermarle said:

Sarahspangles said:

RemotecUK said:

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.

Yes that sounds right. The Annual Allowance cap is £60,000 this year but that is gross, to achieve that in a SIPP (which is Relief at Source) you contribute 80% of £60,000.

Just to repeat a previous point for clarity. The £60K limit includes any employer contributions.
So with no carry forward, the limit is £60K minus any employer contributions.

Also minus any contributions you make to your employers scheme! The £60K covers all payments into your pensions from all sources in a single tax year..