Overpaid into SIPP: how to set it right?

aroominyork

OH has overpaid into her SIPP, adding £5k net instead of £4k net based on £6k earnings and £1k trading allowance. Not claiming trading allowance on her self-assessment would leave £250 overpaid (£6250 gross from the £5k net) - almost but not quite enough. How should she set this right?

DRS1

Talk to the SIPP provider and get the excess contribution refunded.

Albermarle

As above, do not contact HMRC as it could confuse matters.

aroominyork

Thanks. Does this need to be done before end of FY or can it be afterwards, in case OH earns that extra £250?

zagfles

aroominyork said:

Thanks. Does this need to be done before end of FY or can it be afterwards, in case OH earns that extra £250?

It has to be done after the end of the FY, because before then you can't know for certain you've paid too much. And you have 6 years so no rush:

PTM045000 - Contributions: refunds of contributions - HMRC internal manual - GOV.UK

aroominyork

Will the provider refund the ineligible tax relief to HMRC? Also, will her self assessment throw up a query when contributions are declared that are more than earnings?

Isthisforreal99

Don't claim the trading allowance - problem solves.

Jeremy535897

Isthisforreal99 said:

Don't claim the trading allowance - problem solves.

An interesting question. You can claim the trading allowance or actual expenses. So if the trading allowance is not claimed, actual expenses must be claimed.

aroominyork

She has no expenses. Presumably she isn't obliged to claim trading allowance? But even without claiming that £1k she remains £250 over-invested.

Jeremy535897

aroominyork said:

She has no expenses. Presumably she isn't obliged to claim trading allowance? But even without claiming that £1k she remains £250 over-invested.

You are obliged to claim either the actual expenses or the trading allowance. So if her actual expenses are nil, she can claim nil rather than claim the trading allowance.

zagfles

aroominyork said:

Will the provider refund the ineligible tax relief to HMRC? Also, will her self assessment throw up a query when contributions are declared that are more than earnings?

Yes. I don't think the tax calculation in SA is affected, from what someone else posted a while ago. You could always add a note saying that you're requesting a refund of the excess contributions. Or perhaps request a refund before doing the tax return and put in the amount minus refund. Not sure what the correct thing to do is, perhaps query it with HMRC. Unless someone else here knows.