SIPP Investment
Posted: October 29th, 2020, 6:16 am
Hi,
Just wondering if anyone can clarify what happens with SIPP investments as a higher rate Tax Payer. For context I earn £~112k per year from a single employer. I do already invest in a pension with the employer and have increased my voluntary contributions to 4% as part of their matching scheme. As a higher rate tax payer my 'Tax Free Allowance' gets taken away from me at a rate of £2 for every £1 over the £100k threshold. As I understand it, if I were to invest in a SIPP, I would not only get the regular tax back, but I would also get back my 'Tax Free Allowance'?
Is this correct?
Lastly I would like to understand how the tax free allowance is given back to me? Is it simply applied to my SIPP, or will I get a rebate of it when I submit my tax return?
The reason that I ask, is that I would prefer to invest in S&S ISA's. I just have a funny feeling that later down the line Mr Government might come knocking on the door of private pensions to help make-up their shortfall.....ISA's are also more flexible if I want to use the funds for other purposes such as property investments, or private school fee's etc.
Thanks for your help,
J
Just wondering if anyone can clarify what happens with SIPP investments as a higher rate Tax Payer. For context I earn £~112k per year from a single employer. I do already invest in a pension with the employer and have increased my voluntary contributions to 4% as part of their matching scheme. As a higher rate tax payer my 'Tax Free Allowance' gets taken away from me at a rate of £2 for every £1 over the £100k threshold. As I understand it, if I were to invest in a SIPP, I would not only get the regular tax back, but I would also get back my 'Tax Free Allowance'?
Is this correct?
Lastly I would like to understand how the tax free allowance is given back to me? Is it simply applied to my SIPP, or will I get a rebate of it when I submit my tax return?
The reason that I ask, is that I would prefer to invest in S&S ISA's. I just have a funny feeling that later down the line Mr Government might come knocking on the door of private pensions to help make-up their shortfall.....ISA's are also more flexible if I want to use the funds for other purposes such as property investments, or private school fee's etc.
Thanks for your help,
J