SIPP - Tax question

[Gary29]

Bit of background; I'm fairly new to SIPP's I have a company pension scheme which my employer and I pay into regularly, and a SIPP which I transferred my old pension pot into, and it has been ticking over for a couple of years now, doing quite well, but I have not been contributing anything into it.

So here is my question, I've decided to start paying into the SIPP alongside my company pension, my mortgage is already overpaid by the maximum. I understand I get tax relief at 20% for any contribution I make.

So I have made a cash payment (I'll adjust the figure to keep it easy) £80, and they have claimed tax at £20 to make £100 total cash in the pot.

But I only seem to have £80 to invest, it doesn't seem to allow me to invest the £20, so what happens to that tax relief? Can I not self invest that?

[Orchid1]

Can take a while to show up as they need to claim from HMRC usually.

[LeoSayer]

I thought that SIPP providers automatically gross up at the basic rate of tax - so you should have seen £80 + £20 straight away.

Phone your SIPP provider and ask them.

[JulianPH]

The SIPP provider has to reclaim this tax from HMRC. This is what is causing the delay.

Some providers pre-fund this, but usually this is insurance company pension schemes rather than SIPP providers.

[Mr Pointy]

With Hargreaves Lansdown it took at least 6 weeks for the tax credit to show up & it was automatically invested in the same way as the initial investement.

If you have money left over don't forget you can go back three years & use up any unused allowance once you have maxed out this year's allowance.

[Orchid1]

Mr Pointy said:

With Hargreaves Lansdown it took at least 6 weeks for the tax credit to show up & it was automatically invested in the same way as the initial investement.

If you have money left over don't forget you can go back three years & use up any unused allowance once you have maxed out this year's allowance.

That's interesting, i'm with HL and the tax credits I receive just sit in the cash account. I'm assuming they don't invest it if it's under a certain amount then?

[Stay in Bed Instead]

The SIPP provider puts in a monthly relief at source claim for each tax month, 6th - 5th.

The claim is paid on the 19th (or might be 16th) of the following month.

So if you made a contribution on 6th September you should see the credit on or shortly after 19th November.

[JulianPH]

Stay in Bed Instead said:

The SIPP provider puts in a monthly relief at source claim for each tax month, 6th - 5th.

The claim is paid on the 19th (or might be 16th) of the following month.

So if you made a contribution on 6th September you should see the credit on or shortly after 19th November.

Correct, though the input dates/days may vary, payment from HMRC does not (provided any tax reclaims were made within the relevant input dates).

I can't comment about others, but we automatically invest the tax relief when received. We certainly don't hold this in cash (and I am pretty sure this is the same across the board).

[Mr Pointy]

Orchid1 said:

Mr Pointy said:

With Hargreaves Lansdown it took at least 6 weeks for the tax credit to show up & it was automatically invested in the same way as the initial investement.

If you have money left over don't forget you can go back three years & use up any unused allowance once you have maxed out this year's allowance.

That's interesting, i'm with HL and the tax credits I receive just sit in the cash account. I'm assuming they don't invest it if it's under a certain amount then?

Since HL have kindly deleted all the historic information from my SIPP account I can't definately confirm it was automatically re-invested but that's certainly my recollection. I could be wrong of course.

[Somebody]

HL don't automatically invest the cash on the tax claimed on the contribution.

[JulianPH]

Somebody said:

HL don't automatically invest the cash on the tax claimed on the contribution.

Interesting. That made me double check and IM does automatically invest this into you selected portfolio(s).

[Mattt]

Remember (if a higher rate tax payer) to claim the other 20% from HMRC through your tax return, or by simply calling them and telling them.

[Zoon]

Somebody said:

HL don't automatically invest the cash on the tax claimed on the contribution.

They do on mine?

[Mr Pointy]

Zoon said:

Somebody said:

HL don't automatically invest the cash on the tax claimed on the contribution.

They do on mine?

There's a selection you can make in your account settings for automatic reinvestment (account settings/withdrawals, income & loyalty bonus). Maybe this applies to Tax Credits as well?

[Highway Star]

Mr Pointy said:

There's a selection you can make in your account settings for automatic reinvestment (account settings/withdrawals, income & loyalty bonus). Maybe this applies to Tax Credits as well?

It does I believe. I choose to keep mine as cash and drip feed it in. Its a nice little windfall every 4 weeks!

[Somebody]

Mr Pointy said:

There's a selection you can make in your account settings for automatic reinvestment (account settings/withdrawals, income & loyalty bonus). Maybe this applies to Tax Credits as well?

No. In my HL SIPP dividends are automatically reinvested (as instructed), but tax claims sit as cash when received pending investment instructions.

[Highway Star]

Highway Star said:

It does I believe. I choose to keep mine as cash and drip feed it in. Its a nice little windfall every 4 weeks!

On seeing the post below, I double checked, and indeed he/she was right and I was bang wrong!