Sipp Question

ajphills

Hi,

Can someone answer this for me please?

I invested £2880.0 into a Sipp in 2025 and receivd the 20% tax relief if I leave the money there will I get 20% this year or should I draw down and put £2880 back in.

Thanks

masonic

You only get tax relief on contributions. It is a one-off for each amount you pay in.

ajphills

So draw down and start again yes ?

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82038627#Comment_82038627

That depends on what you're actually trying to achieve?

ajphills

https://forums.moneysavingexpert.com/discussion/comment/82038630#Comment_82038630

Simply trying to take advantage of the 20%

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82038635#Comment_82038635

But, unless you're not currently paying tax, 75% of the money is taxed when withdrawn from the SIPP, so the net return on your money is more likely to be 6.25% (ignoring investment growth and various other factors)…

ajphills

I do not pay tax

Thank you

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82038657#Comment_82038657

Fair enough - in which case it is indeed an effective way of earning 25% annually on your £2880 for as long as that's the case!

LHW99

You are old enough to withdraw from a pension?

MiserlyMartin

Most people would be paying tax so the OP is in a rare and unique situation. When their state pension kicks in they definitely will be paying tax on drawdown from a SIPP. In any case they will need to wait until the next tax year to contribute £2880 again if they are not working

friolento

To withdraw from a SIPP, you must be at least 55 (57 soon)

You can only deposit £2,880 once each tax year