Tax Relief on SIPP Payments

[mffn69]

If I make a payment personally into my SIPP, I effectively make a net payment and my SIPP provider then claims 22% tax relief from the Government and it gets added to SIPP.

If I was to make a SIP payment directly from my Ltd Co, does the same apply i.e. ability to claim 22% tax relief?

Any help would be appreciated.

[Fred Bloggs]

If I make a payment personally into my SIPP, I effectively make a net payment and my SIPP provider then claims 22% tax relief from the Government and it gets added to SIPP.

If I was to make a SIP payment directly from my Ltd Co, does the same apply i.e. ability to claim 22% tax relief?

Any help would be appreciated.

No. The contribution offsets corporation tax instead.

[KackAttack]

If I was to make a SIP payment directly from my Ltd Co, does the same apply i.e. ability to claim 22% tax relief?

Paying directly means you are paying gross of any taxation from your Ltd, so no NI / Income / Corp Tax is payable. Your SIPP provider will ask you if the payment is gross or nett of tax and will not add anything to a gross payment.

Post 6th April, Corp Tax is 21% and Basic rate tax is 20% - so it will be slightly more effecient to pay a SIPP contribution gross and save 21% tax rather than 20% which will be added to a Nett payment.

[Hiram King Of Tyre]

Paying directly means you are paying gross of any taxation from your Ltd, so no NI / Income / Corp Tax is payable. Your SIPP provider will ask you if the payment is gross or nett of tax and will not add anything to a gross payment.

Post 6th April, Corp Tax is 21% and Basic rate tax is 20% - so it will be slightly more effecient to pay a SIPP contribution gross and save 21% tax rather than 20% which will be added to a Nett payment.

Don't you also need to factor NI in?

[dude69]

Don't you also need to factor NI in?

Not if you make the payment from dividend or savings income.

[Hiram King Of Tyre]

for gross payments I meant

[KackAttack]

For a gross payment, NI doesnt come into it - you are paying gross out of your company account and are not liable to any taxation on this amount

[IR35 Avoider]

The money used to make an employer contribution would otherwise

• be paid as salary, or
• be paid net of corporation tax as a dividend, or
• be distributed net of corporation tax as a capital gain when the company is wound up.

The first option would definitely apply if the income is IR35-caught.

If the first alternative would apply, then NI is avoided by paying the pension contribution.