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SIPP contribution limit
Comments
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Dazed_and_C0nfused said:QrizB said:aroominyork said:Really, even though the Marriage Allowance would reduce her taxable income... and hence there would be less paid tax for her to reclaim through SIPP contributions?
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aroominyork said:Dazed_and_C0nfused said:QrizB said:aroominyork said:Really, even though the Marriage Allowance would reduce her taxable income... and hence there would be less paid tax for her to reclaim through SIPP contributions?N. Hampshire, he/him. Octopus Intelligent Go elec & Tracker gas / Vodafone BB / iD mobile. Ripple Kirk Hill Coop member.Ofgem cap table, Ofgem cap explainer. Economy 7 cap explainer. Gas vs E7 vs peak elec heating costs, Best kettle!
2.72kWp PV facing SSW installed Jan 2012. 11 x 247w panels, 3.6kw inverter. 34 MWh generated, long-term average 2.6 Os.1 -
I've thought about this more and there is a net tax benefit to not using the trading allowance only if the SIPP-invested funds grow in value. In the example below, the top half shows no growth in SIPP value. Net funds after drawdown are £5250 if trading allowance is used - £4250 from SIPP and the £1000 trading allowance retained at the outset - and £5100 if trading allowance is not used. The wheeze fails.QrizB said:She could choose to not claim the trading allowance, and then you could pay £4800 in. This might leave you better off overall; check for yourself.In the bottom half, assume the SIPP grows by 50%. Using the trading allowance results in £7375; not using it results in £7650. The wheeze works.The breakeven SIPP growth is about 17.5%. You can also choose to take into account that using the trading allowance gives you £1000 cash in hand from Day 1 rather than 'returning' that money to you only after drawdown.0 -
aroominyork said:
I've thought about this more and there is a net tax benefit to not using the trading allowance only if the SIPP-invested funds grow in value. In the example below, the top half shows no growth in SIPP value. Net funds after drawdown are £5250 if trading allowance is used - £4250 from SIPP and the £1000 trading allowance retained at the outset - and £5100 if trading allowance is not used. The wheeze fails.QrizB said:She could choose to not claim the trading allowance, and then you could pay £4800 in. This might leave you better off overall; check for yourself.In the bottom half, assume the SIPP grows by 50%. Using the trading allowance results in £7375; not using it results in £7650. The wheeze works.Trading allowance doesn't save you £1000 - it saves you the tax on £1000, which is £200 (assuming a basic rate taxpayer).So in the top box, you're comparing £4250+£200=£4450 to £5100.(That still doesn't look right but it's late and I'm tired. Might come back to it tomorrow.)N. Hampshire, he/him. Octopus Intelligent Go elec & Tracker gas / Vodafone BB / iD mobile. Ripple Kirk Hill Coop member.Ofgem cap table, Ofgem cap explainer. Economy 7 cap explainer. Gas vs E7 vs peak elec heating costs, Best kettle!
2.72kWp PV facing SSW installed Jan 2012. 11 x 247w panels, 3.6kw inverter. 34 MWh generated, long-term average 2.6 Os.0 -
I think it's correct but I overcomplicated it. Ignore the first five lines in yesterday's Excel. Left side panels: use TA, pay £5k gross into SIPP, have untaxed £1k in hand. Right side panels: do not use TA, pay £6k into SIPP.0
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