SIPP tax relief question - Scottish Advanced Rate Tax payer

[MK1RS Bruce]

Few questions on the SIPP tax relief

So its fairly clear that the first 20% tax relief automatically goes into the SIPP when you add in a contribution so £8k becomes £10k

If like me you are a higher rate tax payer in scotland on the "advanced rate" of 45% the remaining % has to be claimed back via tax return

So the question is does that tax relief get credited to the SIPP like the first 20% or does it just reduce your tax liability and therefore you get a tax rebate?

Also being in Scotland am I eligible to get the full 25% above the basic rate back?

As said in another SIPP topic obviously I can only pay in as much as I have earned in that tax year and the total needs to be below £60k between SIPP and employer work place pension but is there anything to stop me using money saved or generated from other avenues (share sales) in order to get a benefit in terms of tax?

So for example

- I earn £99.9k net
- I salary sacifice 25% of my salary plus any bonuses to keep my Net below 100K
- I have £15k of head room to the £60k pension limit
- I sell available shares keeping underneath capital gains exposure and then take income from them and add it to a SIPP claiming back the tax?

[Mr Pointy]

As far as I am aware as long as the funds don't come from a pension (it's called recycling) then it doesn't matter where the money actually comes from.

[LeoSayer]

Why do you want to contribute to a SIPP when you have salary sacrifice which will give you an extra NI saving?

[MK1RS Bruce]

LeoSayer said:

Why do you want to contribute to a SIPP when you have salary sacrifice which will give you an extra NI saving?

Mainly looking for somewhere to put the income from a shares sale. Shares aren’t within an ISA wrapper. I could sell and buy again within an ISA but if I do it into a SIPP I get the tax benefit. I lose the liquidity but that might be a price worth paying for the benefit.

[Josemartinez]

After I claimed my relief I got a new tax code and so paid less tax on my next payslip. I did mine via HMRC online chat and didn't need to do a tax return to claim relief on pension contributions and charity donations.

It may depend on the amount though. I'm not sure if you can ask for a payment from HMRC.

[LeoSayer]

MK1RS Bruce said:

LeoSayer said:

Why do you want to contribute to a SIPP when you have salary sacrifice which will give you an extra NI saving?

Mainly looking for somewhere to put the income from a shares sale. Shares aren t within an ISA wrapper. I could sell and buy again within an ISA but if I do it into a SIPP I get the tax benefit. I lose the liquidity but that might be a price worth paying for the benefit.

Are you talking about single company shares?

Have you quantified what the SIPP tax benefit is, given what size of pension pot you might expect to have at retirement?

With fiscal drag on income tax thresholds and a frozen lump sum allowance and uncertainty on future tax policy the tax benefit of a pension may evaporate if the share grows significantly.

[MK1RS Bruce]

LeoSayer said:

Are you talking about single company shares?

Have you quantified what the SIPP tax benefit is, given what size of pension pot you might expect to have at retirement?

With fiscal drag on income tax thresholds and a frozen lump sum allowance and uncertainty on future tax policy the tax benefit of a pension may evaporate if the share grows significantly.

Yeah single company shares, share has increased 10x since I got them and concerned that they roll back. Not necessarily going to do anything instantly as I think they have growth left / company is still looking healthy but it does concern me I have no diversity in that particular portfolio.

Converting them to cash and investing in a SIPP at least allows me to diversify and mitigate the potential capital gain pain if I have to move quickly

However always open to advice on the best way to protect my assets