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SIPP and Tax

RefMinor
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SIPP and Tax

#351403

Postby RefMinor » October 28th, 2020, 3:59 pm

I have a workplace defined benefit scheme. If I open a SIPP and invest cash in that outside of my workplace scheme is anything I put in grossed up to make it tax free or do I need to claim tax rebates separately. More interested in the mechanics of how it would work and any limits there are as it seems like I could draw it down between retirement and pension kicking in at less than personal allowance and topping up income from ISA savings making it tax free at both ends as it were?

mc2fool
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Re: SIPP and Tax

#351409

Postby mc2fool » October 28th, 2020, 4:24 pm

Start here: https://www.hl.co.uk/pensions/contributions and download their Annual Allowance Factsheet.

Basically you can put into your SIPP the lesser of your earnings and £40K less the "pension input amount" for your defined benefit scheme (a number you have to get from the scheme). The SIPP provider will claim the 20% gross up from HMRC and add it to the pot, but if you're a 40%+ tax payer you have to claim the difference in your self assessment.

Yes, at drawdown it's just regular "income", so if your total first-tranche income is within the personal allowance then there'll be no income tax on it. Do note however that you can take 25% of it tax free anyway.

dspp
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Re: SIPP and Tax

#351456

Postby dspp » October 28th, 2020, 6:54 pm

Moderator Message:
relocated per requests, dspp


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