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When can I pay a lump sum into my SIPP

syrio
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When can I pay a lump sum into my SIPP

#288526

Postby syrio » March 4th, 2020, 5:38 pm

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

Can I pay in a personal contribution lump sum of say £20k at the start of the tax year, or do I have to wait until I have earned £20k of income in the tax year?

DrBunsenHoneydew
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Re: When can I pay a lump sum into my SIPP

#288532

Postby DrBunsenHoneydew » March 4th, 2020, 5:53 pm

It's up to the provider and I suspect they are supposed to check.
They may wish to see proof, but if you proved your income in the previous year they may not ask again if they're happy that you'll earn enough through continuing earnings.

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Re: When can I pay a lump sum into my SIPP

#288536

Postby JohnB » March 4th, 2020, 5:55 pm

You can pay in at anytime. You would just need to back it out if your yearly income didn't cover it later

syrio
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Re: When can I pay a lump sum into my SIPP

#288540

Postby syrio » March 4th, 2020, 6:01 pm

JohnB wrote:You can pay in at anytime. You would just need to back it out if your yearly income didn't cover it later


Thanks, are you sure it is possible to back it out if I end up mistakenly contributing more than I have earned? I was thinking that once the money is in the pension there is no way to access it until I reach pension age.

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Re: When can I pay a lump sum into my SIPP

#288541

Postby JohnB » March 4th, 2020, 6:05 pm

Of course you can always put more than you are allowed into a SIPP, its just you don't get the tax relief. I guess its up to the provider whether they would refund the over contribution.

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Re: When can I pay a lump sum into my SIPP

#288544

Postby dealtn » March 4th, 2020, 6:20 pm

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

Can I pay in a personal contribution lump sum of say £20k at the start of the tax year, or do I have to wait until I have earned £20k of income in the tax year?


Straight away. You also have "carry forward" from previous years, so even if you don't end up earning 20k, you can use "unused" earnings from previous years if such are available.

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Re: When can I pay a lump sum into my SIPP

#288545

Postby kempiejon » March 4th, 2020, 6:28 pm

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

Can I pay in a personal contribution lump sum of say £20k at the start of the tax year, or do I have to wait until I have earned £20k of income in the tax year?


Straight away. You also have "carry forward" from previous years, so even if you don't end up earning 20k, you can use "unused" earnings from previous years if such are available.


Don't think this is the case the maximum you can claim tax relief on is earned income even accounting for carry forward if you only earn say 12k you can only pay in 12k gross.

As another poster said upstream you can pay in more than you earn but cannot get tax back.

syrio
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Re: When can I pay a lump sum into my SIPP

#288547

Postby syrio » March 4th, 2020, 6:30 pm

dealtn wrote:Straight away. You also have "carry forward" from previous years, so even if you don't end up earning 20k, you can use "unused" earnings from previous years if such are available.


I don't think that is correct, I can only use carry forward if I make the maximum possible contribution of £40k in the current tax tax year.

"To use carry forward, you must make the maximum allowable contribution in the current tax year (£40,000 in 2019/20) and can then use unused annual allowances from the three previous tax years, starting with the tax year three years ago."

https://www.pensionsadvisoryservice.org ... ry-forward

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Re: When can I pay a lump sum into my SIPP

#288553

Postby dealtn » March 4th, 2020, 6:43 pm

syrio wrote:
dealtn wrote:Straight away. You also have "carry forward" from previous years, so even if you don't end up earning 20k, you can use "unused" earnings from previous years if such are available.


I don't think that is correct, I can only use carry forward if I make the maximum possible contribution of £40k in the current tax tax year.

"To use carry forward, you must make the maximum allowable contribution in the current tax year (£40,000 in 2019/20) and can then use unused annual allowances from the three previous tax years, starting with the tax year three years ago."

https://www.pensionsadvisoryservice.org ... ry-forward


Yes apologies, the carry forward allows you to utilise earnings beyond 40K, not to bridge any gap between your earnings and £40k.

It does allow you to pay at the start of a tax year more than what you have earned in that year to date, if you can demonstrate carry forward is available and you are likely to be earning 40k+ in the tax year. Ultimately it is correct that contributions in excess of an allowance are permissable, but tax relief won't be allowed (or will have to be repaid if already paid).

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Re: When can I pay a lump sum into my SIPP

#288734

Postby DrBunsenHoneydew » March 5th, 2020, 3:30 pm

Don't forget,if your earnings are high, the allowance is reduced from £40k towards just £10k.
And potentially your carry-forward is also a max of £10k for each such high-earning year even if you made no contributions in those years to a plan you had previously been a member of.


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