We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
SIPP contributions by HR pensioner
Having a bit of a debate whether a higher rate tax payer now aged 70, only income from pensions and savings, would still benefit from paying £2,880 into their SIPP. The SIPP is currently fully invested and is not expected to be drawn on in the next 7-10 years. The investor is in great health but has quite a low risk tolerance. Most of the SIPP is in Vanguard LS 40, which he'd want the £2,880 to add to. He is not bothered about IHT.
What say the forum experts? Should he stick his 2,880 in an ISA or Premium Bonds instead?
Comments
-
Does said HRT have any lump sum allowance left to enable the taking of any PCLS when crystallising these contributions in the future?
0 -
What's his objective?
Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!0 -
Well if you mean he is paying higher rate tax of 40% on at least £3,600 of his income then it would seem very tax efficient on the way in.
£3,600 in the pension for a real cost of £2,160.
If he is paying 40% tax on just 75% of it on the way out it sounds like a viable option.
0 -
He has not taken any allowance from a pension yet
0 -
In your opening post you said his only income was from pensions and savings.
Pensions being plural. So what was that referring to?
0 -
He has 2 defined benefit pensions and state pension . Nothing was taken tax free .
0 -
How do you make £2,160?
0 -
He pays £2,880. The pension company adds £720 in n basic rate tax relief, giving him a pension fund of £3,600.
He then claims higher rate relief from HMRC and, if he has paid sufficient higher rate tax he could be due additional relief of £720 (£3,600 x 20%). £2,880 less £720 = £2,160
3 -
I’d always thought that without any relevant earnings (his ‘only income is from pensions and savings’) you were not able to claim any higher rate tax relief.
0 -
Why ? Relevant earnings (including the minimum) restrict how much you can pay in and get tax relief but not the amount of tax relief you are due, that's based on your overall tax position which will include taxable income that are not relevant earnings.
0
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 355.8K Banking & Borrowing
- 254.9K Reduce Debt & Boost Income
- 456.2K Spending & Discounts
- 248.3K Work, Benefits & Business
- 605.9K Mortgages, Homes & Bills
- 179K Life & Family
- 263.8K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.2K Discuss & Feedback
- 37.7K Read-Only Boards