SIPPs and workplace pensions

[Luke1991 (Luke)]

Morning everyone

I have a question regarding the SIPP that hopefully someone here can answer!

I am a higher rate tax payer and have a workplace pension. Every year I do my self assessment return and claim back an additional 20% tax relief.

With the SIPP it gives me an option to make a contribution. Let’s say I contribute 5k to it on FT. Does this mean that at the end of the year FT will claim and then top it up by 20%? So in effect they add 1k on. In my tax return, I then reference this contribution alongside my workplace one to claim an additional 20% on top?

Final thing … my workplace pension + tax relief + FT contribution + tax relief needs to come under 40k per year?

Thanks to any pension expert in this community that knows the answer to this

[Raul (Ann Onymuz)]

I believe this as been addressed in this thread

MEGATHREAD: Freetrade SIPP

Eventually I’d love to see Freetrade offer a SIPP for a modest monthly charge (free for Alpha of course), which allowed payments from employers and employees and transfers in from other pensions. Adding this topic so that people can vote on the idea. Personally I’d rate this far below the ISA and many trading features, as it’s a complex area that would probably take some time to get right, but eventually it’d be nice to manage a SIPP within freetrade too. Perhaps Freetrade could partner up with…

[FailedTuringTest]

Good news on your first question: Freetrade will collect the basic-rate tax relief directly from the government and put it into your account when you make the contribution, they don’t wait until the end of the year. They say “It normally takes around 6-11 weeks from the contribution to the tax relief appearing in your account” (SIPP - Self-Invested Personal Pension with Freetrade). You can then invest the additional money.

As a higher rate taxpayer, you’ll make an additional claim on your tax return. There’s a box labeled “Payments to registered pension schemes where basic rate tax relief will be claimed by your pension provider” – enter there your total contributions plus the basic rate tax relief you’ve already received (read the instructions carefully and pay attention to gross versus net contributions).

And yes, you should keep an eye on your annual total of all pension contributions, to your workplace pension and to SIPPs, to make sure you don’t go over the limit. If you’re a higher rate taxpayer and making contributions through your employment, that could happen without you noticing if you don’t watch out for it, but you might be able to compensate by using unclaimed allowance from previous years if you’ve contributed less than the maximum in the past.

[Luke1991 (Luke)]

This is a superb answer, thank you so much for taking the time to do this. Really appreciate it

[Luke1991 (Luke)]

Really reinforces how great the SIPP can be and forces the buy and hold strategy!