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Where Taxpayers and Advisers Meet

Calculating how much to pay into SIPP.

thca2023
Posts:1
Joined:Thu Dec 29, 2022 3:06 pm
Calculating how much to pay into SIPP.

Postby thca2023 » Thu Dec 29, 2022 3:14 pm

Hi.

I'm expecting to earn £60K this year and don't want to lose child benefit. I also would like to start a pension.

I've been advised a SIPP would offer tax relief, but I'm confused how much I would need to pay in before 31st March to keep myself below the 50K threshold.

Is there a calculator available online? I'm not great at maths!

Many Thanks

ETaxConsulting
Posts:18
Joined:Sun Nov 29, 2020 3:25 pm
Contact:

Re: Calculating how much to pay into SIPP.

Postby ETaxConsulting » Thu Mar 23, 2023 12:10 pm

Hi.

I'm expecting to earn £60K this year and don't want to lose child benefit. I also would like to start a pension.

I've been advised a SIPP would offer tax relief, but I'm confused how much I would need to pay in before 31st March to keep myself below the 50K threshold.

Is there a calculator available online? I'm not great at maths!

Many Thanks
Hi

It really depends on how you plan to make the pension contribution into the SIPP. So lets assume you are in full-time employment and therefore any contributions into a SIPP will be from your net pay, then you would need to contribute £8,000 into your pension and the SIPP provider would claim the additional 20% basic rate tax relief directly from HMRC. So total contribution into the pension would be £10k and your earnings for child benefit purposes would be £50k. However, assume you are working for yourself so any contributions are paid gross, then you would need to contribute £10k into your pension directly and the SIPP provider would not have to claim back the tax relief at 20% from HMRC. I'm not aware of a specific calculator you could use for this.

Tim
Tax Manager
E-Tax consulting
www.e-taxconsulting.com

chambersiain
Posts:41
Joined:Sun Feb 06, 2022 4:58 pm

Re: Calculating how much to pay into SIPP.

Postby chambersiain » Wed Sep 27, 2023 9:50 pm

Tim just want to clear up a point in your post that could be misread.

As a self employed person you would pay yourself a wage which would subject to personal taxation. Any contributions you would make to a SIPP would be net and grossed up by the pension provider adding 20%.

The only time a contribution would be paid gross and not gain the 20% addition would be if the sole trader paid funds directly from the trading account. This would be similar to a company pension contribution.

D&C
Posts:149
Joined:Mon Nov 25, 2019 11:35 pm

Re: Calculating how much to pay into SIPP.

Postby D&C » Thu Sep 28, 2023 10:00 pm

Chamberlain just want to clear up a point in your post that could be misleading.

Any contributions you would make to a SIPP would be net and grossed up by the pension provider adding 20%.


With a RAS contribution the provider will be "adding" 25%.


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