SIPP & Pension guidance - IM Private Clients

[Autolycus]

JulianPH said:

Have you also considered your annual interest allowance for the cash at bank (£1,000 a year for basic rate tax payers, £500 a year for higher rate)? This is in addition to your personal income tax allowance.

A pension contribution and this allowance should give you all the leeway you are looking for. A charitable donation would look after anything else.

Thank you, Nik and Julian, for the advice so far. The SIPP is on its way.

Could you expand, please, on the "charitable donation" remark? I can find plenty of references to higher rate tax payers being able to claim relief under Gift Aid, but nothing to help the deserving poor, like me. It's still touch and go, not helped by HMRC and my former employer's pension scheme offering a range of estimates for my 2023/2024 pension income.

[IJWS15]

Not sure if this has been answered, I know there are some restrictions on what I can contribute into a private pension if I start drawing down but are there any restrictions on employer contributions?

Edited by IJWS15 on Friday 22 March 09:49

[Intelligent Money]

IJWS15 said:

Not sure if this has been answered, I know there are some restrictions on what I can contribute into a private pension if I start drawing down but are there any restrictions on employer contributions?

Edited by IJWS15 on Friday 22 March 09:49

Hi IJWS15

If you have drawn income, i.e. a taxable payment, from a defined contribution pension then MPPA applies which limits contributions to £10k p.a. gross

Cheers

Nik

[pingu393]

A friend has just been informed that they are the beneficiary of £120,000 death in benefit. They are in a minimum wage job, so earn approx £16,000 pa.

It is only available as a one-off lump sum.

It looks like the payment will be treated as taxable for income tax. Does this mean that it counts as income? Is there any way to avoid any tax?

I think that they can put all their income (approx £3000 net) into a pension. If they do, will they be able to claim 40%, or will it just be the normal 20%.

I expect there are lots of questions to follow.

[edit] I'm now reading that the lump sum is tax-free. Why do these things always land on my lap at a time when all those who can help are unavailable?

Edited by pingu393 on Saturday 18th May 16:53

[JulianPH]

pingu393 said:

A friend has just been informed that they are the beneficiary of £120,000 death in benefit. They are in a minimum wage job, so earn approx £16,000 pa.

It is only available as a one-off lump sum.

It looks like the payment will be treated as taxable for income tax. Does this mean that it counts as income? Is there any way to avoid any tax?

I think that they can put all their income (approx £3000 net) into a pension. If they do, will they be able to claim 40%, or will it just be the normal 20%.

I expect there are lots of questions to follow.

[edit] I'm now reading that the lump sum is tax-free. Why do these things always land on my lap at a time when all those who can help are unavailable?

Edited by pingu393 on Saturday 18th May 16:53

Hi Pingu, as you are probably gathering it can be quite complicated and depends on different factors, the age of the person who died and passed on the benefits being key (under or over 75 years).

You may have it sorted now, but feel free to PM me if you would like me to take a look.

Cheers

Julian

[pingu393]

JulianPH said:

Hi Pingu, as you are probably gathering it can be quite complicated and depends on different factors, the age of the person who died and passed on the benefits being key (under or over 75 years).

You may have it sorted now, but feel free to PM me if you would like me to take a look.

Cheers

Julian

Thanks, the deceased was under 75 when they died.

I'll probably send a PM after we have had a chat with the administrators.

[supersport]

pingu393 said:

A friend has just been informed that they are the beneficiary of £120,000 death in benefit. They are in a minimum wage job, so earn approx £16,000 pa.

It is only available as a one-off lump sum.

It looks like the payment will be treated as taxable for income tax. Does this mean that it counts as income? Is there any way to avoid any tax?

I think that they can put all their income (approx £3000 net) into a pension. If they do, will they be able to claim 40%, or will it just be the normal 20%.

I expect there are lots of questions to follow.

[edit] I'm now reading that the lump sum is tax-free. Why do these things always land on my lap at a time when all those who can help are unavailable?

Edited by pingu393 on Saturday 18th May 16:53

I’ve recently been through this. It was tax free but subject to the life time allowance, this was before the new tax year. ( I assume things might have been different if they were over 75)

[pingu393]

supersport said:

I’ve recently been through this. It was tax free but subject to the life time allowance, this was before the new tax year. ( I assume things might have been different if they were over 75)

Thanks. That's my latest understanding.

[TownIdiot]

I thought I'd asked in here rather than start a new thread.

There is a plot becoming available that is currently commercial use.
It will be vacant possession on completion.

It appears that pension rules state that it must be income producing with a formal lease in place - does this mean that it must be in place in day one or can there be a gap whilst one is put in place?

My pension would have sufficient cash to purchase without the need for a mortgage

Can anyone here clarify?

Thanks in advance.