The Lemon Fool

My wife has declared earnings of about £11K this year, £3K of which were in dividends from shares in an un-sheltered account, and a few hundred from some interest on savings. I thought we should probably move £20K of those shares to an ISA and then some more as a contribution to her SIPP so they get some shelter for subsequent years.

What I'm not sure about is how much she can contribute without attracting an annual allowance charge. Is it her full declared £11K income which includes the dividends and savings, or just income she's had from work (in which case about £7.5K)?

Thanks for any opinions!

G

Gilgongo wrote:[Is it her full declared £11K income which includes the dividends and savings, or just income she's had from work (in which case about £7.5K)?

Random link to HMRC but Relevant UK Earnings are defined as below and don't include dividends or interest income.

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm000001#IDA0Y4CE

Ah thanks - your Goolge-fu is clearly better than mine! The term "relevant earnings" is what I was looking for!

Hi if you put into a SIPP the amount would be limited to 100% of earnings £7,500, which equates to a payment of up to £6,000 and from the taxman £1,500.

fca2019 wrote:Hi if you put into a SIPP the amount would be limited to 100% of earnings £7,500, which equates to a payment of up to £6,000 and from the taxman £1,500.

You can pop more into a SIPP but only the relevant earnings get the tax relief.

Don’t forget that you can also use any carried forwards unused allowance from the previous three years.

Degsy

You can carry forward previous years allowances, but not their earnings. So you could have an allowance of £160k, but still only put £7500 in.