New Higher Rate taxpayer as a result of State Pension

sheslookinhot

I have just started receiving my state pension, pushing me into higher rate tax band and now reducing my PSA to £500. (I was a HR taxpayer as live in Scotland, but PSA was £1000).

Is there any benefit in contributing £2880 to a SIPP each year, and if so how does the tax relief work. Is it automatic or do I need to claim to HMRC ?

TIA

kipsterno1

Some pointers here,

https://forums.moneysavingexpert.com/discussion/5580163/paying-2880-into-pension-when-retired

Marcon

sheslookinhot said:

I have just started receiving my state pension, pushing me into higher rate tax band and now reducing my PSA to £500. (I was a HR taxpayer as live in Scotland, but PSA was £1000).

Is there any benefit in contributing £2880 to a SIPP each year, and if so how does the tax relief work. Is it automatic or do I need to claim to HMRC ?

TIA

If you mean is there a tax benefit, yes. The provider will add tax relief at basic rate to your SIPP, and you reclaim the extra (higher rate) tax direct from HMRC.

Assuming you've not used up your full Lump Sum Allowance, 25% of your SIPP will be tax free and the rest taxed at your marginal rate when you come to withdraw it.

If you give to charity, don't forget you can claim Gift Aid relief at higher rate, reducing the net cost to you.

molerat

Fill in the on line form and HMRC will likely change your tax code to accommodate the extra relief.

https://www.gov.uk/guidance/claim-tax-relief-on-your-private-pension-payments