The Lemon Fool

If I have a SIPP with a low cost broker, eg Vanguard, HL, II etc.

When I make a personal contribution (either regular or a lump sum) to my SIPP, how long it take before the tax relief at 20% appears in my SIPP?

syrio wrote:When I make a personal contribution (either regular or a lump sum) to my SIPP, how long it take before the tax relief at 20% appears in my SIPP?

I usually make the payment as soon into the tax year as I get the necessary funds, often from selling something in a taxed account.

The tax relief usually turns up towards the end of June. So that's more than two months, but less than three.

This is what YouInvest say,

It depends when you pay into your SIPP. If we receive your SIPP contribution on or before the 5th of the month, we’ll reclaim the basic-rate tax relief from HMRC and pay it as cash into your SIPP account on the 25th of the following month

https://www.youinvest.co.uk/faq/when-wi ... id-my-sipp

In my experience with youinvest it is usually around the 25th of the second month following the deposit.

Does anyone know why takes so long? Is it the provider pocketing the interest?

I'm with Hargreaves Lansdown. I contribute monthly, and the money is taken from my bank account around the 7th. Then units are purchased around the 11th. Tax reflief arrives later and the units are purchased around 24th of the month two months later.

E.g. the last completed transaction is
9th December 2019 - money taken from bank account by DD
11th December 2019 - units purchased
21st February 2020 - tax relief credited
24th February 2020 - units purchased from tax relief

It's free money after all, so I'm not going to complain! If the government are keeping the interest, the country's tax liabilities would be reduced, and if the provider is keeping it, my fees should be reduced.

JuanDB wrote:In my experience with youinvest it is usually around the 25th of the second month following the deposit.

If one looks at the extract provided by Darka in the post immediately before yours, the relevance of on or before the 5th of the month becomes clear.

In my situation, I usually fully subscribe to the SIPP with youinvest at the start of the Tax Year, thus ending up with the same effective delay as you.

In other words, I last subscribed on 6 April 2019 and receive the basic rate tax relief into my SIPP on 21 June 2019.

I suppose I could have delayed subscribing until, say, 1 May 2019 and would also have received the basic rate tax relief into my SIPP on 21 June 2019.

PinkDalek wrote:I suppose I could have delayed subscribing until, say, 1 May 2019 and would also have received the basic rate tax relief into my SIPP on 21 June 2019.

Have we then established how the Government mechanism for paying the Tax Relief actually works?

There's a window between the 6th of a month and the 5th of the following month and all contributions in the period are treated alike. The tax relief will show up six to seven weeks after the end of the period.

Alaric wrote:

PinkDalek wrote:I suppose I could have delayed subscribing until, say, 1 May 2019 and would also have received the basic rate tax relief into my SIPP on 21 June 2019.

Have we then established how the Government mechanism for paying the Tax Relief actually works? ...

Some time-consuming searches later but this https://www.gov.uk/government/publications/pension-schemes-registered-pension-schemes-relief-at-source-interim-claims-apss-105 leads to https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/793455/APSS105_08_18_v1.0_NWM.pdf

The latter commences:

Registered Pension Schemes Relief at Source: interim claim

Interim claim by scheme administrator for recovery of tax deducted by individuals or members

Use this form to reclaim the tax deducted by your members from their relievable pension contributions (including stakeholder pension contributions). This form should reach us no later than the last working day of the month of claim so that payment can be made to you on the 21st day of the following month (or the next working day). For example, a claim to 5 June must reach us by the last working day of June. Payment can then be made on 21 July, or the next working day. ...

The Claim and statement section Part 1 Period is pre-populated with From 06 MM YYY and To 05 MM YYYY.

... and the first link states:

A tax month runs from the sixth day of one month to the fifth of the following month.