Need Guidance on SIPP contributions

Trencherpilot2

Hi all, 

 I'm after a bit of guidance please, I'm in the fortunate position of being able to sell my house and if I buy a smaller one, would effectively negate the need for my wage. My theory is, to pay the amount of my salary above the single tax allowance into my SIPP to reduce paying income tax and boost my pension. Is this theory workable or have I forgotten something? My current earnings before O/T are 35000 pa.

Albermarle

By paying money into a SIPP, you do not reduce the amount of tax you pay on your salary. You get tax relief paid into the SIPP.
If you earn £35K, you can add £35K gross to a pension ( gross means including tax relief)
As you are employed, presumably you are already paying some into your workplace pension, so you would have to take that into account as well. 

Dazed_and_C0nfused

Trencherpilot2 said:

Hi all, 

 I'm after a bit of guidance please, I'm in the fortunate position of being able to sell my house and if I buy a smaller one, would effectively negate the need for my wage. My theory is, to pay the amount of my salary above the single tax allowance into my SIPP to reduce paying income tax and boost my pension. Is this theory workable or have I forgotten something? My current earnings before O/T are 35000 pa.

Unless you are Scottish resident contributing to a SIPP won't make any difference to your income tax liability.

But you will get basic rate relief added to your (net) pension contribution.

So say you added £20,000 to the SIPP then the pension company will add £5,000 in basic rate tax relief, giving you a pension fund of £25,000.

As @Albermarle has explained you will need to consider your existing contributions when calculating the maximum gross contribution you can add to a SIPP.