There is an error in your higher rate tax relief calculations. You'd actually need to put in £66.67 at the beginning to get to £100 after tax relief, as the SIPP provider will give the first 20% of tax relief, which would be £16.67 and then you can claim back the second 20% (also £16.67) through your tax return, taking you up to £100. It is not a true 40% tax relief, which caught me out recently. The best solution by far is salary sacrifice, as depending on your circumstances, can result in £100 in actually only costing around £50.
Maybe a better way to look at it is if you put in 80p, the SIPP provider will claim 20p on your behalf and then you can claim an additional 20p through your tax return, which is the equivalent of 33% tax relief in total
Killik & Co The way you describe it is exactly how I expected it to work, but when I spoke with HMRC about it, they said that it doesn't actually work that way. I my case, I was paying £600 net in each month, the SIPP provider then added £150 for the 20% tax relief and then HMRC added another £150 for the higher rate tax relief, taking the total contribution up to £900 rather than the £1000 that I would have expected. Maybe there's a reason it worked out this way for my particular circumstances, but I can't imagine what it would be. Love the videos, by the way. Thanks Matt
Useful video thanks. I think you said no NI was payable from State Pension Age but I don’t think any NI is payable on pension from a registered UK pension scheme irrespective of age? Thanks
been watching his videos for years, always a good source of information... keep up the good work
There is an error in your higher rate tax relief calculations. You'd actually need to put in £66.67 at the beginning to get to £100 after tax relief, as the SIPP provider will give the first 20% of tax relief, which would be £16.67 and then you can claim back the second 20% (also £16.67) through your tax return, taking you up to £100. It is not a true 40% tax relief, which caught me out recently. The best solution by far is salary sacrifice, as depending on your circumstances, can result in £100 in actually only costing around £50.
Maybe a better way to look at it is if you put in 80p, the SIPP provider will claim 20p on your behalf and then you can claim an additional 20p through your tax return, which is the equivalent of 33% tax relief in total
Killik & Co The way you describe it is exactly how I expected it to work, but when I spoke with HMRC about it, they said that it doesn't actually work that way.
I my case, I was paying £600 net in each month, the SIPP provider then added £150 for the 20% tax relief and then HMRC added another £150 for the higher rate tax relief, taking the total contribution up to £900 rather than the £1000 that I would have expected.
Maybe there's a reason it worked out this way for my particular circumstances, but I can't imagine what it would be.
Love the videos, by the way.
Thanks
Matt
Useful video thanks. I think you said no NI was payable from State Pension Age but I don’t think any NI is payable on pension from a registered UK pension scheme irrespective of age? Thanks