How much can I put in my SIPP?

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harrys66
harrys66 Posts: 99 Forumite
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in Pensions, annuities & retirement planning
Hello

Have a SIPP with H&L (held as cash, no ongoing charges)

I had no income last year so put in the basic £2880 and government added the £720

I will have £2440 PAYE income this year (upto april 4th)

I also have a small business opened this year in august (will probably be less than £8000 turnover)

Bit confused over how much cash I can put in my SIPP above the £2880 when the two other sources of income are still provisional (less so the PAYE)?

Thanks

Harry

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  • Mnd
    Mnd Posts: 1,699 Forumite
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    edited 20 February 2019 at 7:27PM
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    As i understand it, you can pay in your full earnings, so if you were to earn 10k, then you can put 8k into a pension, which will be grossed up to 10k
    No.79 save £12k in 2020. Total end May £11610
    Annual target £24000
  • xylophone
    xylophone Posts: 44,426 Forumite
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    then you can put UK into a pension,

    Going the whole hog?:eek:

    If he has relevant earnings of £10,000 in the current tax year, he can contribute £8000 to the SIPP and the provider will claim £2000.

    https://www.hl.co.uk/pensions/tax-relief/calculator
  • AlanP_2
    AlanP_2 Posts: 3,253 Forumite
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    Remember turnover is not always equal to earnings, what are your earnings on that 8k turnover?
  • harrys66
    harrys66 Posts: 99 Forumite
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    Hi, I've yet to work that out :)

    Would it be a question of waiting as near as possible to the 4th of April, as I understand this years contribution would have to be done before the 5th April to qualify under this tax year?
  • ChopperST
    ChopperST Posts: 1,257 Forumite
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    Correct as long as your funds hit the SIPP before the new tax year they will count as this years contributions. Remember to take into account the grossed up amount which will take up to 12 weeks to show in your account (I don't know how long HL take to apply the TR).
  • harrys66
    harrys66 Posts: 99 Forumite
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    ChopperST wrote: »
    Correct as long as your funds hit the SIPP before the new tax year they will count as this years contributions. Remember to take into account the grossed up amount which will take up to 12 weeks to show in your account (I don't know how long HL take to apply the TR).

    Sorry getting a bit confused here ....

    1) What exactly is "grossed up amount" please?

    2) Do I have to make sure that I leave enough time so that the TR (Tax rebate) by HL goes into my SIPP before the 4th April?

    3) Will i have to do a set of accounts before 4th April to get my Sole Trader income for the year? (I haven't told HMRC of my new income yet as I don't need to until next years self assessment)

    Thank you
  • zagfles
    zagfles Posts: 20,323 Forumite
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    harrys66 wrote: »
    Sorry getting a bit confused here ....

    1) What exactly is "grossed up amount" please?
    As explained above. If your relevant earnings are £10k, then you can put £10k gross into your SIPP. But you actually pay in £8k which is grossed up to £10k with the tax relief.
    2) Do I have to make sure that I leave enough time so that the TR (Tax rebate) by HL goes into my SIPP before the 4th April?
    No. The tax relief might not get applied till the new tax year but the total gross cont counts in the tax year the net is paid in. So eg you pay in £800 on 31st March, it will count as a £1000 gross cont in this tax year.
    3) Will i have to do a set of accounts before 4th April to get my Sole Trader income for the year? (I haven't told HMRC of my new income yet as I don't need to until next years self assessment)

    Thank you
    Note that HMRC rules allow you to claim a refund of any excess you put in above the 100% of relevant earnings - however make sure the SIPP provider allows it and it's not against their T&Cs. If it's HL have a word with them, their CS is usually pretty good.
  • harrys66
    harrys66 Posts: 99 Forumite
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    zagfles wrote: »
    As explained above. If your relevant earnings are £10k, then you can put £10k gross into your SIPP. But you actually pay in £8k which is grossed up to £10k with the tax relief.No. The tax relief might not get applied till the new tax year but the total gross cont counts in the tax year the net is paid in. So eg you pay in £800 on 31st March, it will count as a £1000 gross cont in this tax year. Note that HMRC rules allow you to claim a refund of any excess you put in above the 100% of relevant earnings - however make sure the SIPP provider allows it and it's not against their T&Cs. If it's HL have a word with them, their CS is usually pretty good.




    Thank you for the deatiled reply, just the info i needed :)
  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
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    Will i have to do a set of accounts before 4th April to get my Sole Trader income for the year? (I haven't told HMRC of my new income yet as I don't need to until next years self assessment)

    No but it would be sensible to have an idea of what your profit is going to be as that (coupled with your PAYE income) is what determines how much you can contribute and receive tax relief on without the hassle of having to claim a refund of the excess contributions made.
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