SIPP & Pension guidance - IM Private Clients

[Jasey_]

https://www.gov.uk/tax-on-your-private-pension/ann...

This seems to suggest you can pay in 40k.

Not sure when hmrc say "paid in by you or anyone else" they include themselves.

Maybe someone can clarify further ?

[Jasey_]

anonymous said:

[redacted]

It says you can pay in 40k a year.

It doesn't say you can pay in 32k and they will make it up to 40k.

If you have no other pensions I read that as you can pay in 40k.

[Carbon Sasquatch]

Jasey_ said:

It says you can pay in 40k a year.

It doesn't say you can pay in 32k and they will make it up to 40k.

If you have no other pensions I read that as you can pay in 40k.

You're reading it incorrectly.

You can pay in 40k from your gross income which equates to less from your net income. By all means pay in 40k from net, but you won't get any tax relief on 8k of it. That is, unless you have unused entitlement from the prior 3 years....

BTW - the 'you or anyone else' comment above - that means you, your employer, your spouse, friend etc. - anyone making a payment in your name. It doesn't matter who pays, it's a total of 40k in your name.

[Jasey_]

https://www.ii.co.uk/pensions/contributions/carry-...

Says if you have unused allowance of 90k after 3 years you can pay 90k and get tax relief on it.

[Jasey_]

anonymous said:

[redacted]

Sure does.

Thanks for clearing it up .

[Intelligent Money]

Jasey_ said:

anonymous said:

[redacted]

Sure does.

Thanks for clearing it up .

Hi Jasey

It is exactly as chicken dinner has said above, the annual allowance is the gross contribution to your pension so the maximum personal (net) contribution is £32k. Employer/company contributions are typically gross so the max for them is £40k.

Cheers

Nik

[Mr Pointy]

Jasey_ said:

https://www.ii.co.uk/pensions/contributions/carry-...

Says if you have unused allowance of 90k after 3 years you can pay 90k and get tax relief on it.

Indeed, that's how the carry forward rule works; in fact if you hadn't made any pension contributions in the previous three years you could, in theory, contribute £160k gross (£128k from you, £32k topped up by HMRC). There's probably caveats around taper relief but that's the principle.

[Tye Green]

Whilst I've got a sipp + ISAs etc, decided to use the gov site to determine what state pension I'd get (a few years away yet) and it gave this... but I thought the max was £179ish per week?

[Jasey_]

Tye Green said:

Whilst I've got a sipp + ISAs etc, decided to use the gov site to determine what state pension I'd get (a few years away yet) and it gave this... but I thought the max was £179ish per week?

Guessing you are not young and we're not contracted out from the 2nd state pension ?

If that's the case you get a higher start point.

But have been wrong before .

[Intelligent Money]

Mr Pointy said:

Jasey_ said:

https://www.ii.co.uk/pensions/contributions/carry-...

Says if you have unused allowance of 90k after 3 years you can pay 90k and get tax relief on it.

Indeed, that's how the carry forward rule works; in fact if you hadn't made any pension contributions in the previous three years you could, in theory, contribute £160k gross (£128k from you, £32k topped up by HMRC). There's probably caveats around taper relief but that's the principle.

Apologies for being Mr Picky on this one, but with carry forward it is an area that is often missed, You can only get tax relief on carry forward contributions if you have the earnings to cover the contribution in the year of payment. So while you can carry forward the amount that you can contribute you also need to have the earnings in the year of contribution to gain the tax relief.


Cheers

Nik

[Tye Green]

Jasey_ said:

Tye Green said:

Whilst I've got a sipp + ISAs etc, decided to use the gov site to determine what state pension I'd get (a few years away yet) and it gave this... but I thought the max was £179ish per week?

Guessing you are not young and we're not contracted out from the 2nd state pension ?

If that's the case you get a higher start point.

But have been wrong before .

Well, I didn't know that I wasn't contracted out so that's news, but I was born early 60s so not before 1951 which is given on gov web site as the qualifying date. Are there any other factors which could result in such a high state pension?

[Jasey_]

This is the page you need to read (I think)

https://www.gov.uk/new-state-pension/how-its-calcu...

[Mr Pointy]

Intelligent Money said:

Mr Pointy said:

Jasey_ said:

https://www.ii.co.uk/pensions/contributions/carry-...

Says if you have unused allowance of 90k after 3 years you can pay 90k and get tax relief on it.

Indeed, that's how the carry forward rule works; in fact if you hadn't made any pension contributions in the previous three years you could, in theory, contribute £160k gross (£128k from you, £32k topped up by HMRC). There's probably caveats around taper relief but that's the principle.

Apologies for being Mr Picky on this one, but with carry forward it is an area that is often missed, You can only get tax relief on carry forward contributions if you have the earnings to cover the contribution in the year of payment. So while you can carry forward the amount that you can contribute you also need to have the earnings in the year of contribution to gain the tax relief.

How about if you are a Director & the company is making the payment

[Jockman]

Mr Pointy said:

Intelligent Money said:

Mr Pointy said:

Jasey_ said:

https://www.ii.co.uk/pensions/contributions/carry-...

Says if you have unused allowance of 90k after 3 years you can pay 90k and get tax relief on it.

Indeed, that's how the carry forward rule works; in fact if you hadn't made any pension contributions in the previous three years you could, in theory, contribute £160k gross (£128k from you, £32k topped up by HMRC). There's probably caveats around taper relief but that's the principle.

Apologies for being Mr Picky on this one, but with carry forward it is an area that is often missed, You can only get tax relief on carry forward contributions if you have the earnings to cover the contribution in the year of payment. So while you can carry forward the amount that you can contribute you also need to have the earnings in the year of contribution to gain the tax relief.

How about if you are a Director & the company is making the payment

Full annual allowance then. No link to salary on an employer contribution. You still need to have a pension scheme in place for that period though.

[Intelligent Money]

Jockman said:

Mr Pointy said:

Intelligent Money said:

Mr Pointy said:

Jasey_ said:

https://www.ii.co.uk/pensions/contributions/carry-...

Says if you have unused allowance of 90k after 3 years you can pay 90k and get tax relief on it.

Indeed, that's how the carry forward rule works; in fact if you hadn't made any pension contributions in the previous three years you could, in theory, contribute £160k gross (£128k from you, £32k topped up by HMRC). There's probably caveats around taper relief but that's the principle.

Apologies for being Mr Picky on this one, but with carry forward it is an area that is often missed, You can only get tax relief on carry forward contributions if you have the earnings to cover the contribution in the year of payment. So while you can carry forward the amount that you can contribute you also need to have the earnings in the year of contribution to gain the tax relief.

How about if you are a Director & the company is making the payment

Full annual allowance then. No link to salary on an employer contribution. You still need to have a pension scheme in place for that period though.

Hi Both,

Spot on Jockman that is exactly it.


Cheers

Nik

[pingu393]

One for Nik.

I'm a sole trader, so I can only input 80% of my annual income (with HMRC inputting the other 20%).

If I were a limited company, could I input as much as I like, but HMRC would only input 20% of my annual income? Or would HMRC add more?

[Mr Pointy]

pingu393 said:

One for Nik.

I'm a sole trader, so I can only input 80% of my annual income (with HMRC inputting the other 20%).

If I were a limited company, could I input as much as I like, but HMRC would only input 20% of my annual income? Or would HMRC add more?

£40k is the limit, in a company it's not related to income/profits (remember carry forward). HMRC will add 20/25% to whatever you put in.

[tighnamara]

Mr Pointy said:

pingu393 said:

One for Nik.

I'm a sole trader, so I can only input 80% of my annual income (with HMRC inputting the other 20%).

If I were a limited company, could I input as much as I like, but HMRC would only input 20% of my annual income? Or would HMRC add more?

£40k is the limit, in a company it's not related to income/profits (remember carry forward). HMRC will add 20/25% to whatever you put in.

I am not sure that is correct, I thought ............but could be wrong.....

1. Pension contribution was based on income/ profit, where the company had to have the required income / profit for the year the payment is made (including any carry forward).

2. If pension is paid directly from Limited Company there would be nothing claimed back from HMRC as no tax would have been paid when payment made from Limited Company.

Edited by tighnamara on Monday 12th July 16:32

[Mr Pointy]

tighnamara said:

I am not sure that is correct, I thought ............but could be wrong.....

1. Pension contribution was based on income/ profit, where the company had to have the required income / profit for the year the payment is made (including any carry forward).

2. If pension is paid directly from Limited Company there would be nothing claimed back from HMRC as no tax would have been paid so nothing to claim back.

Hmm I'll have to check what I was told.

[tighnamara]

Mr Pointy said:

tighnamara said:

I am not sure that is correct, I thought ............but could be wrong.....

1. Pension contribution was based on income/ profit, where the company had to have the required income / profit for the year the payment is made (including any carry forward).

2. If pension is paid directly from Limited Company there would be nothing claimed back from HMRC as no tax would have been paid so nothing to claim back.

Hmm I'll have to check what I was told.

I could be totally wrong though and misunderstood

Nik will be along to put us right......