Tax Relief on SIPP contributions
Discussion
I currently have an ISA coming to the end of it's bonus rate, thinking what to do next, and idly wondering if a SIPP would be a better home for some or all of it, but that would depend on,
- Can I claim tax relief on it at the point I empty the ISA and create a SIPP?
- I'm currently in a company pension, which offers a salary sacrifice option that I use heavily. For tax relief purposes, would it be better to reduce those contributions to the point I fall into upper rate, claim 40% tax relief on the money moved into a SIPP, then bump the contributions back up again in the next tax year?
If you've already got the pension loaded it's well worth running an ISA alongside, but make sure it's got proper investments in it. When interest rates are so low and everyone gets some tax free interest anyway a cash ISA is probably a waste of valuable tax benefits.
To answer your question - yes, you can juggle resources to increase SIPP contributions (and get tax relief) so long as you've got some relevant earnings and so long as you haven't already hit any of the limits.
To answer your question - yes, you can juggle resources to increase SIPP contributions (and get tax relief) so long as you've got some relevant earnings and so long as you haven't already hit any of the limits.
shtu said:
I currently have an ISA coming to the end of it's bonus rate, thinking what to do next, and idly wondering if a SIPP would be a better home for some or all of it, but that would depend on,
- Can I claim tax relief on it at the point I empty the ISA and create a SIPP?
- I'm currently in a company pension, which offers a salary sacrifice option that I use heavily. For tax relief purposes, would it be better to reduce those contributions to the point I fall into upper rate, claim 40% tax relief on the money moved into a SIPP, then bump the contributions back up again in the next tax year?
Is this money definitely for longer-term / retirement planning purposes, or you might access after 55 (current access age)?- Can I claim tax relief on it at the point I empty the ISA and create a SIPP?
- I'm currently in a company pension, which offers a salary sacrifice option that I use heavily. For tax relief purposes, would it be better to reduce those contributions to the point I fall into upper rate, claim 40% tax relief on the money moved into a SIPP, then bump the contributions back up again in the next tax year?
If so, then I'm unsure why you would consider an ISA when you can utilise SS down to the LEL, benefiting from the additional NI savings (2% for HRT and 12% for BRT). I would use the ISA monies to supplement my income and increase my contributions via SS.
There are obviously caveats, one being might you reach / breach the LTA before retirement? The above also assumes you have access to emergency savings etc and are comfortable to lock the money away until at least 55 (currently).
Other things to consider are, would your company scheme allow partial transfers? If they do then this would be the mechanism to contribute via SS and periodically undertake a partial transfer in to a SIPP/PP so as to access wider investment options. Before considering this I would want to ensure I was clear on the charges levied against the company scheme as opposed to a SIPP/PP.
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