Reply With QuoteSurely you put in £800 into the new pension, they add in an extra £200 in tax relief and you claim £200 back via tax return, so you end up in the same position, £1000 in your pot, costing you £600, no?
Guys. Would welcome some feedback here. I recently changed employer. My last job operated a salary sacrifice scheme meaning pension contributions essentially had tax relief factored in (Higher rate taxpayer). new employer has a far less generous scheme meaning I am going to be contributing around £1k per month into a Hargreaves Lansdowne SIPP myself. My understanding is that 20% tax relief is claimed by the pension provider with the balance being claimed via tax return. Essentially contributing £1k would cost me £600 if tax relief was contributed at source but my understanding is that if I contribute £600 then a further £150 will be added to the pension pot (i.e 20% relief on the total amount of £750). Would I then have to claim back a further £150 in the Annual return (representing 20% of the £600 I paid plus the £150 relief at source) or would I claim 20% of the £600 I have actually paid (20% of physical funds leaving my account). HMRC lady said 'she didn't answer questions on private pensions'. Logic would dictate that it's the former but then that means I would have only contributed (with tax relief and tax reclamation) £900 a month in total rather than the £1k I was wanting to contribute!
#confused.com here!
Surely you put in £800 into the new pension, they add in an extra £200 in tax relief and you claim £200 back via tax return, so you end up in the same position, £1000 in your pot, costing you £600, no?
^^ This is correct.
Thanks gents
Makes sense.
Ryan
I'm in exactly the same position contributing to an HL SIPP. The 20 per cent relief will be added to your fund and you will have to claim the remaining 20 per cent. You don't have to submit a return, just write to them with a screenshot of your contributions for the tax year. I can pm the HMRC address where you have to write to if you want it.
Yes!Originally Posted by Brighty
If you are lucky enough to earn £100-125k you get 60% tax relief.
So, put £800 and the Government contributes £200 to make £1000. Then, claim the £400 back on your tax return.
Thread revival as it's an interesting one this year.
If you still have LTA and annual allowance to play with, a top up payment would get the tax relief but potentially be investing into the market at a sub-optimal time.
My 0.02 is that for higher rate tax payers in particular that can afford to, the relief still more than compensates for the market pricing risk, what say you?
Why not get the 40% top up for free assuming you are a high rate tax payer (less if you end up paying tax on your pension at the other end).
You could always change the type of funds that make-up your pension investment if you are risk averse.
I’ll be putting a large lump sum in my pension before the end of next week, but had a good year with a very decent bonus meaning I get 60% tax relief, so it is a no brainier for me. Especially as I’m only 4 years away from the minimum retirement age.
Use it or lose it
Edit : I’m going to wait as late as possible next week as I think the stock market will fall next week as more bad news originates.
Also after CV I don’t expect the £40k allowance to be around for too much longer, given the monumental amount of national debt to be paid back. Grab it while you can.
Last edited by noTAGlove; 28th March 2020 at 15:24.
Also if you’ve not maxed out your allowances for previous years, up to 4 years back I believe, you’re allowed to retrospectively pay in for those years too.
I use an IFA for all this stuff, so not sure how you go ablout it though.
It's 3 years for carry over so 16/17 is the last year to cover off atm from memory. Talking in investing in sub optimal time, all my recent SIPP top ups and current future instructions have been and are in cash right now, you don't have to jump into putting it into an investiment at this time.
If your scheme allows it make the payment before the end of the tax year but don't allocate it to a particular fund & hold it as cash until a later date when you think the markets are recovering. If you can't hold it as cash then it's slightly more difficult decision but I'd tend to think the tax relief is valuable enough to risk the investment, depending on the fund you put it into.
I would think most, if not all pensions have some kind of default cash fund so if you’re risk averse at the moment invest it in there and then move across as and when. Or drip feed it over.
From memory, unused relief is available to use in future years (subject to time limit you mention) but you still need to have adequate earnings to relieve the brought forward.
They should be able to tell you about the way relief works but you'll have to claim it - on SA return in the first instance.
EDIT: This might be helpful:
https://www.pensionsadvisoryservice..../carry-forward
Last edited by David_D; 29th March 2020 at 16:57.
I’ve just spoke to Aviva and can nominate any fund for my lump sum I’m adding today.
I’m going for the ‘deposit’ fund which is lowest risk, and provides returns equivalent to bank building societies (i.e. nothing), but protects the capital.
I’ll then shift it to higher risk funds in a few months when this all settles down.
I just tried to call them for a similar conversation and got a recorded message to say they have closed their call centres so can't take calls??
Did they say how quickly they allocate money once sent through - I've seen some providers are quoting close on Friday to get into this tax year, others are saying close Wednesday.
Log into your pension, then you should see an online chat function.
Using the online chat function, ask the agent for a call back.
I paid debit card and it was credited to my pension fund with immediate effect.
I hope this helps. Apparently BACS takes 3-5 days to clear, so best use debit card if you want it to happen quick.
Great, thanks
Posting Permissions
