ISA/ SIPP split

robaber

Hello

Each month I contibute to my SIPP, as well as a Stocks and Shares ISA. I am a higher rate tax payer.

My SIPP provider claims 20% tax relief and I claim the other 20% from HMRC.

I currently have a contribution split of 55% ISA and 45% SIPP.

I claim child benefit. In order to avoid High Income Child Benefit Charge, I keep my Net Adjusted Income below £60,000.

My salary has increased. In order to keep my Net Adjusted Income Below £60,000 I need to increase my SIPP contributions.

This would take me to a 45% ISA and 55% SIPP.

I am deciding if this is okay, or at what point I feel the SIPP split is too high.

The alternative would be to pay some High Income Child Benefit Charge and contribute more to my ISA.

Any thoughts would be appreciated.

NoMore

Very difficult to comment without your age, your planned retirement age, your planned retirement income, the actual balances of your ISA/Pensions. Any other savings/Pensions that might affect the decision.

For most people retiring at 'normal' age (60+) you would expect their Pension pots to be a lot bigger than their ISA's but this is a generalisation and it's really down to people's individual circumstances and desires.

robaber

https://forums.moneysavingexpert.com/discussion/comment/82019109#Comment_82019109

Thank you.

I am 41. I plan to retire at 68.

My ISA is at 25k. My SIPP is at 5k.

I also have a Workplace Defined Benefit pension. Which will be 38k a year.

Albermarle

Your DB workplace pension ( public sector ?) is so many many times more valuable than your ISA or SIPP, that the split between the latter is probably not that important.

robaber

https://forums.moneysavingexpert.com/discussion/comment/82019152#Comment_82019152

Thanks.

Yes, public sector.

Perhaps I will allow the split to drift to my SIPP, while I am claiming child benefit and then shift back to 50/50, when child benefit stops.

masonic

I suppose the risk is you end up being a higher rate taxpayer in retirement, but in that case you're still better off overall as you've retained the child benefit.

"Perhaps I will allow the split to drift to my SIPP, while I am claiming child benefit and then shift back to 50/50, when child benefit stops."

This seems very sensible. Who knows, maybe one day we'll get an overhaul to the tax system to get rid of some of these cliff-edges.

badger09

https://forums.moneysavingexpert.com/discussion/comment/82019318#Comment_82019318

Airborne sus (domesticus or other) anyone?