Question on adding £2880 to a SIPP

Stones

Hi,

In this tax year I have so far paid £1000 in to my SIPP, which at the time was covered by earned income to get the tax relief.
As I now no longer have any relevant earned income, can I still add £2880 this tax year, or do I have to remove £1000 from this total, i.e. I can now only pay in a further £1880?

Hope that makes sense.

Thanks. 

MallyGirl

You can contribute up to your earnings in the tax year - it doesn't matter that you aren't earning any more

Aretnap

If you have earned income from employment since April 6th then you DO still have relevant earned income for this tax year. It's earnings and contributions for the tax year as a whole that matter, not for individual months or whatever. 

So the maximum that you can contribute this tax year is either 80% of the amount that you've earned since April 6th, or £2880, whichever is greater. Either way, the £1000 that you have already contributed counts towards this limit.

So how much did you earn since April?

Next tax year you will be limited to £2880 net/£3600 gross, unless you start working again.

Stones

Ok, I just checked and taxed income this year is £3416.

So given that I have contributed £1250 so far (£1000 + £250 tax relief), I can now pay in up to £2166 including the tax relief, which I work out as £1733 nett ?

However that means it is less than £2880, so I can pay in £1880 as question above?

I think my original question was if you have £2880 to play with, plus earned income, but I think you have answered that for me. 

Dazed_and_C0nfused

Stones said:

Ok, I just checked and taxed income this year is £3416.

So given that I have contributed £1250 so far (£1000 + £250 tax relief), I can now pay in up to £2166 including the tax relief, which I work out as £1733 nett ?

However that means it is less than £2880, so I can pay in £1880 as question above?

I think my original question was if you have £2880 to play with, plus earned income, but I think you have answered that for me. 

You seem to be overcomplicating things.

With earnings relevant for pension contribution purposes of just £3,416 (I'm assuming that is what you mean by "taxed income") you can contribute a maximum gross contribution of £3,600, inclusive of the basic rate relief added to relief at source contributions to a SIPP.

Do you have any contributions as an employee to factor in?

Stones

Yes, excluding the employer contribution, I made an AVC of £147.

Aretnap

Stones said:

Ok, I just checked and taxed income this year is £3416.

So given that I have contributed £1250 so far (£1000 + £250 tax relief), I can now pay in up to £2166 including the tax relief, which I work out as £1733 nett ?

However that means it is less than £2880, so I can pay in £1880 as question above?

I think my original question was if you have £2880 to play with, plus earned income, but I think you have answered that for me. 

Do you mean taxed or taxable income? I ask because a lot of people get confused about how tax relief works and start deducting their personal allowance from their income to work out how much money they've actually paid tax on. There's no need - it's your total earned income that matters,  regardless of how much you have paid actual tax on.

But yes if your total earned income for the year is less than £3600 then the limit that applies is £3600 (including tax relief), not your total income. And you get the tax relief whether you have actually paid any income tax this year or not.

molerat

Plus, as you have thrown in "employer contributions" and "AVC", the limit applies across all pensions, not just the SIPP.

Stones

Ok, thanks for the comments - I think I'll just pay in £1500, then I know I'm covered, and next year put in the £2880 (unless I can be bothered to work again, which is unlikely at the moment ). 

cloud_dog

Stones said:

Yes, excluding the employer contribution, I made an AVC of £147.

As you have mentioned 'AVCs', might this imply the workplace scheme is a Defined Benefit scheme of some sort?

IF it is, does the whole 'Pension Input Amount' need to be factored in to any AA calculations?

Dazed_and_C0nfused

cloud_dog said:

Stones said:

Yes, excluding the employer contribution, I made an AVC of £147.

As you have mentioned 'AVCs', might this imply the workplace scheme is a Defined Benefit scheme of some sort?

IF it is, does the whole 'Pension Input Amount' need to be factored in to any AA calculations?

Yes it would.  But I don't think the AA is relevant to this particular discussion.