SIPP from lump sum

[Oswulf]

My sister, who's retired, will receive a lump sum from a family trust this year. Is this considered "income" for the purposes of investing in a SIPP, so raising the contribution limit from £3,600 to £60,000 for this tax year only?

Thanks.


Edit: Just to add, and I'm not sure if it's relevant, the money will be coming from surrendering segments of an investment bond that have been assigned to her.

[mc2fool]

My sister, who's retired, will receive a lump sum from a family trust this year. Is this considered "income" for the purposes of investing in a SIPP, so raising the contribution limit from £3,600 to £60,000 for this tax year only?

Thanks.


Edit: Just to add, and I'm not sure if it's relevant, the money will be coming from surrendering segments of an investment bond that have been assigned to her.

No. The test isn't against income, it's against relevant earnings.

See https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100#earnings for the list of what counts.

[Oswulf]

No. The test isn't against income, it's against relevant earnings.

Whilst I suspect you're right, this page says "You can contribute 100% of your annual income to your SIPP each tax year"

https://www.ii.co.uk/ii-accounts/sipp/m ... tributions

[Gersemi]

No. The test isn't against income, it's against relevant earnings.

Whilst I suspect you're right, this page says "You can contribute 100% of your annual income to your SIPP each tax year"

https://www.ii.co.uk/ii-accounts/sipp/m ... tributions

That is very sloppy wording from Interactive Investor, however in the same section they also state:
"If you do not have any earnings in a tax year, you can still contribute a maximum of £3,600 (£2,880 in personal contributions and £720 tax relief)."

Which is a nod to the fact that they are using "income" as a synonym for "earnings", which of course it is not.

Always better to go to gov.uk for the definitive rules.

[mc2fool]

No. The test isn't against income, it's against relevant earnings.

Whilst I suspect you're right...

There's no need to suspect, I provided a link to the HMRC manual on the matter precisely so you could check for yourself.

You can lead a horse to water....