Tax, NI and SIPP investment

[financer]

Hi, please could someone shed light on how SIPP contributions impact on tax to be paid. Have put on my thoughts on this based on some figures below:


Total income from self employment, employment and savings = £100,110

SIPP investment = £2000 deposited + £500 relief = £2500

Adjusted income - £100,110 - £2500 = £97,610

Taxable income = £97610 - £12570

[SueEllen]

Luckily there is this thing called Google


https://www.gov.uk/national-insuranc...0contributions.

https://www.gov.uk/government/collec...l-calculations

Etc

[northernladuk]

You sure you mean self employed? Which one of those do you class as your LTD company if there is one?

If you are dealing with 6 figures a year wouldn't it be wise to get an accountant?

[financer]

I did have a look at google but the bits around ANI etc confused me.

total income listed includes self employed sole trader income.

Just wanting to know how SIPP leads to tax payments required

[SueEllen]

Then take the advice given by northernladuk and get an accountant.

In the last two years mine has managed to get me £12k back for £150 out lay.

[Lance]

Hi, please could someone shed light on how SIPP contributions impact on tax to be paid. Have put on my thoughts on this based on some figures below:


Total income from self employment, employment and savings = £100,110

SIPP investment = £2000 deposited + £500 relief = £2500

Adjusted income - £100,110 - £2500 = £97,610

Taxable income = £97610 - £12570

NOTE: if you pay personally into any pension (SIPP or other) that is after you have paid income tax. There is no income tax relief. That's why you get pension tax relief.

Talk to a professional, either an IFA, an accountant or both.

[BigLadFromBeeston666]

You'll want to pay into your SIPP from company funds, which in turn will reduce your CT liability. It would be inefficient to pay into your SIPP from post income tax funds.

An accountant will be able to tell you how this impacts your operating profit, and therefore ability to distrbiute dviidends etc.

If you want specific advice on the level of contributions you will need to reach a certain goal, or advice on which funds to invest in, an IFA is your best bet. FWIW I don't have an IFA, as I invest in a low cost global index trackers so with a bit of knowledge you can DIY it.

In short: definitely get an accountant. Only consider an IFA if you're Mr.Monopoly Man.

[Lance]

In short: definitely get an accountant. Only consider an IFA if you're Mr.Monopoly Man.

Christ only knows what you mean by Monopoly Man.

It is bad advice to advise someone to not seek advice from an independent financial adviser.
You might choose to not have one. That may be the right decision for you (although I doubt it given your advice), but probably not for the OP.

I don't use an IFA for my SIPP fund management, but I do use an IFA for pension strategy and retirement planning. I also used an IFA to consolidate all my old employment pensions.
I am amazed that professionals, on a professional forum, think that getting professional advice from a professional isn't a good idea.

[Guy Incognito]

Christ only knows what you mean by Monopoly Man.

It is bad advice to advise someone to not seek advice from an independent financial adviser.
You might choose to not have one. That may be the right decision for you (although I doubt it given your advice), but probably not for the OP.

I don't use an IFA for my SIPP fund management, but I do use an IFA for pension strategy and retirement planning. I also used an IFA to consolidate all my old employment pensions.
I am amazed that professionals, on a professional forum, think that getting professional advice from a professional isn't a good idea.

The vast majority of IFAs are crooks, mis-selling you high cost products and adding no value beyond what you can Google yourself. I'd never use one.

But that's just my opinion.

[BigLadFromBeeston666]

Christ only knows what you mean by Monopoly Man.

It is bad advice to advise someone to not seek advice from an independent financial adviser.
You might choose to not have one. That may be the right decision for you (although I doubt it given your advice), but probably not for the OP.

I don't use an IFA for my SIPP fund management, but I do use an IFA for pension strategy and retirement planning. I also used an IFA to consolidate all my old employment pensions.
I am amazed that professionals, on a professional forum, think that getting professional advice from a professional isn't a good idea.

You can consolidate your pensions yourself using a platform like Vanguard. My issue with IFAs is that they charge very high fees and attempt to sell you funds they have a vested interest in.

What does your IFA do for you in terms of "pension strategy" and "retirment planning"? How much do they charge?

Saying it is "bad advice" outright is short-sighted. As the poster above me has mentioned, it's a matter of opinion.

EDIT: how much did you pay this IFA to get your pensions consolidated?