How much can i pay into a SIPP?

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zolablue25
zolablue25 Posts: 1,652 Forumite
in Pensions, annuities & retirement planning
If I wanted to pay a lump sum from my savings how much would I be allowed to pay in to a SIPP and still get a tax benefit from all of the payment?

If I earn £30K is the limit I can pay:

£30K-Personal Tax allowance-company pension payments?

Thanks

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  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
    Uniform Washer
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    Potentially £30k (you paying £24,000 and the SIPP provider adding £6,000 basic rate tax relief).

    Is the £30k your taxable wage i.e. P60 value?

    Do you pay into a pension with your employer?
  • MallyGirl
    MallyGirl Posts: 6,627 Senior Ambassador
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    edited 12 April 2018 at 6:17PM
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    tax allowance doesn't come into it. If you earn £30k then £30k can go into pension regardless of the fact that you didn't pay tax on £11.5k of it. some of that from you and some in tax relief
    it applies across all pensions combined.
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  • zolablue25
    zolablue25 Posts: 1,652 Forumite
    edited 12 April 2018 at 5:45PM
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    Yes I pay into a company pension scheme. Its a basic one whereby I pay the minimum amount required for a workplace pension (3%) and my company pays the minimum they need to plus 1% (so, also currently 3%). And, yes, the £30k is my P60 total

    So, in the example given, I can pay £24K minus my and my employers contributions to a company pension approx £1800 (if my maths is right). So I could pay a sum of £22200 and the SIPP provide would add £4400?

    MallyGirl, are you saying the same thing, but in a different way? i.e. the total in would be £30K or I can pay £30K and get 20% on top of that (excluding the company pension for simplicity)?

    Edit: My maths isn't right is it. I need to work backwards from £30K. So take the 1800 off the 30 leaving 28,200. This would be the total I could pay in when you add on the 20% so £23500?
  • Linton
    Linton Posts: 17,173 Forumite
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    Your employers contribution isnt included in the £30k. So you can contribute £30k- your contribution to your employers scheme. You do that by actually paying 80% of the amount into the SIPP. HMRC will add the missing 20%.
  • zolablue25
    zolablue25 Posts: 1,652 Forumite
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    Linton wrote: »
    Your employers contribution isnt included in the £30k. So you can contribute £30k- your contribution to your employers scheme. You do that by actually paying 80% of the amount into the SIPP. HMRC will add the missing 20%.

    Great thanks.

    So, £30,000 - £900 = £29100 total

    So my contribution would be (29100/120)*100 = £24,250
    HMRC contribution = £4850

    Got it. Thanks

    Ah, just one more thing (I think I watched too much Columbo as a kid). Can I pay in one lump at any time during the year or must it be at year end or in monthly installments?
  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
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    If you aren't a higher rate payer then a SIPP contribution doesn't normally save you any income tax (you get the basic rate tax relief added to your pension fund but it doesn't affect your own tax liability) but if you are resident in Scotland for tax purposes and earning the amount you are referring to then you get a little bonus in 2018/19

    https://www.gov.uk/government/publications/pension-schemes-relief-at-source-for-scottish-income-tax-newsletter-february-2018/pension-schemes-relief-at-source-for-scottish-income-tax-newsletter-february-2018
  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
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    So my contribution would be (29100/120)*100 = £24,250
    HMRC contribution = £4850

    No, if you are contributing £29,100 then you pay £23,280 and the pension provider adds £5,820 basic rate tax relief. I think you have got confused with the 20% tax relief at source amount.
  • zolablue25
    zolablue25 Posts: 1,652 Forumite
    edited 12 April 2018 at 6:34PM
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    Dazed_and_confused wrote: »
    So my contribution would be (29100/120)*100 = £24,250
    HMRC contribution = £4850

    No, if you are contributing £29,100 then you pay £23,280 and the pension provider adds £5,820 basic rate tax relief. I think you have got confused with the 20% tax relief at source amount.

    I certainly have! Didn't realise there was a difference, despite being told in a previous thread about it! (it didn't sink in)

    Got it now, thanks
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