SIPP help - urgent!

pecunianonolet

Hi there,

My partner is receiving a large bonus with the end of March salary, which will land in the bank account tomorrow. It was expected for April payment initially but employer decided to pay out this tax year.

My partner is on a salary sacrifice scheme and the pension provider is Aegon.

The issue is she missed the deadline to let the employer know in time (before she even knew the bonus amount) that she wanted it sacrifised so it is going through payroll and HMRC would take a hefty chunk of it in tax. She spoke to Aegon about making a one off contribution and they have been super unhelpful and told her it is not possible and told her to speak to HR of her company and they in turn told her to speak to Aegon. Aegon did say that in any way it would not be prosessed in time for this tax year to count.

We now thought about opening a SIPP, pay the bonus in and claim tax relief from HMRC later by giving them a call to claim (higher rate tax payer in Scotland) At a later point perhaps consolidate and make a transfer of the SIPP into the workplace pension (if even possible).

Aim: Reduce her taxable pay to below 50270 so she can get her full PSA back and make sure not half of the bonus is eaten by tax.

Time is running out so advice would be required on:

• What SIPP would work
• How to calculate the amount to pay into a SIPP to get her taxable pay below (we know the exact amount of interest received in this tax year, no dividends or other income)

Sam_666

Any sipp will work, but you need to find one that works for you cost wise.
Pay in sipp 60% of amount that is above £50270. Ignore intrest earnings, it must be recognised earnings for pension purpose.

penners324

YYou Need to be opening the account today.

Plus of course you can pay into Aegon pension. Get logged into that portal and find the details

LHW99

II SIPP deadlines (fixed monthly charging)

https://www.ii.co.uk/learn/tax/tax-year-end/tax-year-end-deadlines#sipp

HL dedadlines (% charging)

https://www.hl.co.uk/pensions/sipp

Looks like 5th April for both these, probably doable online

Easyjet77

https://forums.moneysavingexpert.com/discussion/6661894/sipp-help-urgent

£50270? I'm sure the Scottish higher rate 42%. starts around APPX £43000.

DRS1

https://forums.moneysavingexpert.com/discussion/comment/81943236#Comment_81943236

I think it should be 80% not 60%.

And I think you should include the taxable interest because you want to get below a figure for total taxable income. So total taxable income - £50270 (or whatever the figure is in Scotland) = X. 80% of X is what you contribute to the SIPP. The SIPP reclaims 20% of X from HMRC. You report a pension contribution of X to HMRC so they can add X to your higher rate threshold for calculating your tax due (and any refund).

Oh and just to take up @Sam_666 point about relevant earnings for pension purposes X should not be greater than your taxable earnings.

pecunianonolet

Thanks for the answers, she won't be able to get down to a lower Scottish tax band as not enough cash on hand for that so the aim is to at least restore the full PSA

Marcon

https://forums.moneysavingexpert.com/discussion/comment/81943248#Comment_81943248

Not if the Aegon scheme is a net pay scheme, which could be why there appears to be an issue doing that.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81943248#Comment_81943248

The Aegon pension in this case is set up to receive payments from the employer, as it is a salary sacrifice scheme. It can be that they can not process a personal payment under relief at source.

Most pensions are flexible about this, and can handle different sorts of contributions, but a few can/will not.

If you add a personal contribution, these pension providers will not add the basic rate tax relief. Then as we have seen from other threads, it can be a long and uphill struggle with HMRC to get it sorted out.