SIPP & Pension guidance - IM Private Clients

[s3pc1989]

Carbon Sasquatch said:

https://www.gov.uk/claim-tax-refund

and then make sure you're projections are accurate for 23/24 - https://www.tax.service.gov.uk/check-income-tax/in...

Thanks Carbon S - appreciate the link!

[Consigliere]

I need to speak to one of the IM team about ISA for kids, is it still Nik or is there a new sheriff in town yet? I know he's off to pastures new.

[Stevil]

Consigliere said:

I need to speak to one of the IM team about ISA for kids, is it still Nik or is there a new sheriff in town yet? I know he's off to pastures new.

Nik isn't going anywhere as far as I'm aware, it's Coops who is leaving.

[Consigliere]

Stevil said:

Nik isn't going anywhere as far as I'm aware, it's Coops who is leaving.

Yes, absolutely, i stand corrected. Will ping him an email.

[Intelligent Money]

Consigliere said:

Stevil said:

Nik isn't going anywhere as far as I'm aware, it's Coops who is leaving.

Yes, absolutely, i stand corrected. Will ping him an email.

What away to find out I'm leaving 😂 turns out PH has all the info before anybody else 😜

I'm still here drop me a message [e-mail]

Cheers

Nik

[pingu393]

Carbon Sasquatch said:

Retire early and get £12,570 per year of it at zero tax

What's wrong with the other £4190 that you could have tax-free?

[Carbon Sasquatch]

pingu393 said:

Carbon Sasquatch said:

Retire early and get £12,570 per year of it at zero tax

What's wrong with the other £4190 that you could have tax-free?

Agree - you can have both

I've retired at 55 so I can take 25% tax free + £12,570 per year for 12 years tax free - and so can my wife . At 67 the state pension will take the majority of the tax free allowance - maybe all of it by then, who knows ?

[Atlantis67]

I have a of query on the pension annual allowance and would really appreciate any advice given.

I’m a high earner and so taper relief applies to my annual pension contributions. I have maximized the payments I can make into my pension within my tapered annual allowance, making use of carry forward when possible.

My pension pot at present currently totals £500k. I am unlikely to ever withdrawn any money from my pension in retirement, and see it as a way of keeping some wealth outside of my estate for IHT purposes. Therefore, I would like to increase my pension value up to the lifetime allowance in the next 5-7 years.

I have excess capital from earnings currently sitting in a GIA. If I were to transfer say 100k from my GIA into my pension this year, what would the tax implications be, given that I have already paid additional rate income tax on these earnings? I appreciate that I can’t claim tax relief on the pension contribution, but will I be liable to any further taxation through self assessment?

[Mazinbrum]

Carbon Sasquatch said:

pingu393 said:

Carbon Sasquatch said:

Retire early and get £12,570 per year of it at zero tax

What's wrong with the other £4190 that you could have tax-free?

Agree - you can have both

I've retired at 55 so I can take 25% tax free + £12,570 per year for 12 years tax free - and so can my wife . At 67 the state pension will take the majority of the tax free allowance - maybe all of it by then, who knows ?

You can also crystallise an amount but leave it in you SIPP possibly allowing people to retire earlier. Eg crystallise 48k, but only withdraw 12k tax free plus 12570k under the income tax allowance giving you over 24k tax free, the remaining 23430 remains in your crystallised pot which will obviously be taxable.

[Kudos]

Question on additional contributions from income which is non salary please. I have been looking and didn’t see the answer. It’s dependent on what may be coming from the chancellor with regards to increased annual pension contribution allowance.

I’m employed and between myself/employer, £40k annual pension contribution is made. All taxed at source.
I also have buy to let (mostly standard residential, but some commercial - I believe this is relevant) income, with properties/income in my personal name. My self assessment looks after the tax on that eg I pay it.

If the annual pension contribution limit is raised and I make personal contributions into a scheme using the income from property, can I get full tax relief? Or is this limited to 20/25%?

[Mr Pointy]

Kudos said:

Question on additional contributions from income which is non salary please. I have been looking and didn’t see the answer. It’s dependent on what may be coming from the chancellor with regards to increased annual pension contribution allowance.

I’m employed and between myself/employer, £40k annual pension contribution is made. All taxed at source.
I also have buy to let (mostly standard residential, but some commercial - I believe this is relevant) income, with properties/income in my personal name. My self assessment looks after the tax on that eg I pay it.

If the annual pension contribution limit is raised and I make personal contributions into a scheme using the income from property, can I get full tax relief? Or is this limited to 20/25%?

I don't think rental income counts as "relevant UK income" unless it is from holiday lets:
https://adviser.royallondon.com/technical-central/...
https://www.gov.uk/hmrc-internal-manuals/pensions-...

You might want to check that last link is still the latest guidance though.

[Kudos]

Thanks. That first post confirmed it, didn’t see relevant earnings for residential BTL on HMRC. I know there is a distinction for furnished holiday lets.

So if I make a contribution from bank account I’d at least benefit from 20/25% relief as they may think it’s from my already taxed income?

[IJWS15]

I am employed and planning to retire in July this year, a colleague has taken compassionate leave and I may be staying on for a few months longer.

If I start taking some final salary pension and at the same time am making pension contributions from salary would HMRC view this as recycling?

[Jasey_]

IJWS15 said:

I am employed and planning to retire in July this year, a colleague has taken compassionate leave and I may be staying on for a few months longer.

If I start taking some final salary pension and at the same time am making pension contributions from salary would HMRC view this as recycling?

Think the recycling only applies to pension lump sums.

https://www.gov.uk/hmrc-internal-manuals/pensions-...

For recycling to apply you would need to increase your pension contributions.

You may need to check if you can contribute if you start taking pension there are some limits that apply but final salary schemes could be different.

[IJWS15]

Jasey_ said:

Think the recycling only applies to pension lump sums.

https://www.gov.uk/hmrc-internal-manuals/pensions-...

For recycling to apply you would need to increase your pension contributions.

You may need to check if you can contribute if you start taking pension there are some limits that apply but final salary schemes could be different.

Been thinking about this and they should not have a problem. As I am still earning the pension will be taxed at my marginal rate (40%) and the relief on pension payments will be at the same rate.

[Speed1283]

I have what is probably a dumb question relating to working out the optimum SIPP contribution (non salary sacrifice) to stay below £99.9k.

In recent years I've managed to stay below that threshold by using a salary sacrifice 'top up' into my DB scheme. Unfortunately a quirk of the scheme limits the 'top up' annual limit. This year I'm unable to stay below the threshold by utilising this top up feature.

I still have plenty of headroom in terms of the £40k annual pension contribution limit, over the past three years.

My intention therefore is to set up a separate private SIPP with the intention of dumping the minimum amount in that I need to stay below £99.9k income for the year.

Usually my pension contributions are via salary sacrifice, this SIPP would be post tax and NI etc.

I.e. if hypothetically I were £5k over the £99k threshold, i would normally just make a £5k contribution via salary sacrifice to stay below £99k.

However, for a non-salary sacrifice SIPP contribution would it still be £5k I need to pay in, or is it £5k + 40%? (Apologies if this is a stupid question!)

[Intelligent Money]

Speed1283 said:

I have what is probably a dumb question relating to working out the optimum SIPP contribution (non salary sacrifice) to stay below £99.9k.

In recent years I've managed to stay below that threshold by using a salary sacrifice 'top up' into my DB scheme. Unfortunately a quirk of the scheme limits the 'top up' annual limit. This year I'm unable to stay below the threshold by utilising this top up feature.

I still have plenty of headroom in terms of the £40k annual pension contribution limit, over the past three years.

My intention therefore is to set up a separate private SIPP with the intention of dumping the minimum amount in that I need to stay below £99.9k income for the year.

Usually my pension contributions are via salary sacrifice, this SIPP would be post tax and NI etc.

I.e. if hypothetically I were £5k over the £99k threshold, i would normally just make a £5k contribution via salary sacrifice to stay below £99k.

However, for a non-salary sacrifice SIPP contribution would it still be £5k I need to pay in, or is it £5k + 40%? (Apologies if this is a stupid question!)

Hi Speed1283

A couple of things to aware of. With a DB scheme your contribution test against the £40k is not based on the contributions you and your employer make, it is based on the "accrual in that year" i.e. how much your pension benefits grew in that year.

Your scheme administrator should be able to give you the "pension input" for any given tax year.

For the contribution, if you need to make a gross contribution of £5k you pay a net of £4,000. 20% is claimed back by the pension provider and is paid into the scheme so £5k goes into the pension. You claim the additional 20% via HMRC and that is paid back to you via coding or a refund.

Cheers

Nik

[Speed1283]

Intelligent Money said:

Hi Speed1283

A couple of things to aware of. With a DB scheme your contribution test against the £40k is not based on the contributions you and your employer make, it is based on the "accrual in that year" i.e. how much your pension benefits grew in that year.

Your scheme administrator should be able to give you the "pension input" for any given tax year.

For the contribution, if you need to make a gross contribution of £5k you pay a net of £4,000. 20% is claimed back by the pension provider and is paid into the scheme so £5k goes into the pension. You claim the additional 20% via HMRC and that is paid back to you via coding or a refund.

Cheers

Nik

Thanks Nik that's appreciated.

Yeah, I checked with the admin who confirmed my net headroom for the past three years so I'm confident I have more than enough for the additional contribution I think I'll need to make. Obviously this time next year when they run the calc I assume I'll need to factor in my private SIPP contribution myself.

Thanks for the clarification on the amount. So in essence once I work out how much I am over the threshold, I need to make a SIPP contribution of that amount -20% (I may include a sight buffer just in case too).

When doing my tax return next Jan, I'm assuming there is a section where I can input any SiPP contributions and at that point it'll work out that my 'net' income is lower than the £99k threshold (my P60 won't take into account the SIPP).

[mikeiow]

chucklebutty said:

Twice I've tried to get someone from IM to engage on pension advice in the last 2 weeks, a phone call and then the online 'get in touch' and no one has replied. They must know I'm an archetypical low net worth type of individual ;-)

Firstly…they don’t give advice, only guidance!
Second: have you emailed Nik? Perhaps slipped past: try him again!

[AdamIM]

Hi all,

An unofficial news article suggesting the Chancellor will increase the LTA and possibly an increase to the 40k cap (tax relief)

From the BBC
People are expected to be able to save up to £1.8m over a lifetime, up from £1.07m currently.
The policy aims at stop people from reducing their hours or retiring early due to the tax charges.
Persuading workers to work for longer is part of UK plans to boost growth.
The chancellor could also increase the £40,000 annual cap on tax-free contributions to pensions, to £60,000.