Reply to: New to SIPP, some questions

[northernladuk]

That's you told

I'll take that

[Paralytic]

NLUK: annoying as you can be, appreciate your help.

That's you told

[win10]

In simple terms - paying into a pension via salary sacrifice will reduce all tax and NI contributions

I think I found the answer. Before NLUK's input.
NLUK: annoying as you can be, appreciate your help.

[northernladuk]

I am confused here. How is this salary sacrifice different to an umbrella that dont do it?
E.g I get my net pay (gross - tax nad 2xNICs) of £100 and I put this £100 into SIPP. I still £25 from the government i.e. tax back. I loose the NICs.
You described the same above.
Is putting in SIPP via salary sacrifice a way to NOT pay NICs?

You really need to do a bit of your own research. Here is a link asking the same question, covering the same points and hopefully answering this and the rest of teh questions you haven't asked yet.

https://www.contractoruk.com/forums/...mbrella-2.html

There are plenty more if you use the google search method to search the forums or just google for articles.

[win10]

Nope Salary Sacrifice =100% of the money received. So £100 from the pre tax "agency umbrella rate" (i.e the money the agency pays your umbrella for the work you did) goes into your pension.

From paid income you can reclaim the income tax paid but not the NIC part so for every £100 - you would receive £55 of it after tax in your bank account. If you then paid that £55 into your pension the income tax refund will take it up to £75 or so.

So Salary Sacrifice will put £25 (or 1/3 depending on how you calculate) more into your pension with less work by you - all it requires is picking a good umbrella company.

I am confused here. How is this salary sacrifice different to an umbrella that dont do it?
E.g I get my net pay (gross - tax nad 2xNICs) of £100 and I put this £100 into SIPP. I still £25 from the government i.e. tax back. I loose the NICs.
You described the same above.
Is putting in SIPP via salary sacrifice a way to NOT pay NICs?

[northernladuk]

Thanks for the input. Did my reading and clear now.

However for future reference what is the situation with umbrella and SIPP?
If they want to contribute upto 40k, great.
But if they dont want can you contribute yourself from the post tax and NIC money and get the taxes back (at 40% - 20 via SIPP scheme and 20% via SATR)?
I guess in this way you loose the ~12% (or is is 25% NIC)?

If the umbrella wants to pay 40k into SIPP is this from the gross income i.e. you also save on NIC?

Thought you did your reading and it was clear now?

You join an umbrella that lets you put in to your SIPP and carry on as normal.

[eek]

If they do it is this pre tax and NIC at 25%? So effective saving of ~45%?

Nope Salary Sacrifice =100% of the money received. So £100 from the pre tax "agency umbrella rate™" (i.e the money the agency pays your umbrella for the work you did) goes into your pension.

From paid income you can reclaim the income tax paid but not the NIC part so for every £100 - you would receive £55 of it after tax in your bank account. If you then paid that £55 into your pension the income tax refund will take it up to £75 or so.

So Salary Sacrifice will put £25 (or 1/3 depending on how you calculate) more into your pension with less work by you - all it requires is picking a good umbrella company.

[win10]

If an umbrella offers salary sacrifice you won't pay any tax on the money.

If they don't you will end up being able to claim the income tax proportion back but will lose 25% or so due to Employer and Employee NI.

If they do it is this pre tax and NIC at 25%? So effective saving of ~45%?

[eek]

If an umbrella offers salary sacrifice you won't pay any tax on the money.

If they don't you will end up being able to claim the income tax proportion back but will lose 25% or so due to Employer and Employee NI.

[win10]

Thanks for the input. Did my reading and clear now.

However for future reference what is the situation with umbrella and SIPP?
If they want to contribute upto 40k, great.
But if they dont want can you contribute yourself from the post tax and NIC money and get the taxes back (at 40% - 20 via SIPP scheme and 20% via SATR)?
I guess in this way you loose the ~12% (or is is 25% NIC)?

If the umbrella wants to pay 40k into SIPP is this from the gross income i.e. you also save on NIC?

[Paralytic]

Questions:
If I have personal savings of 40k.
If I open a SIPP now and dont pay 40k from the company, but put my own saved 40k.
Can I do this at all or it must be up to 8k (my salary)?
And will I get any tax back? Mind I havent paid any tax when on 8k salary.
How does this work?

You can pay up to your salary (£8K) but this includes tax relief. So, you'd pay in £6,400 and your SIPP Pension provider should top it up with £1,600 tax relief at some point thereafter. You can pay in more than your earnings, but you're not eligible for tax relief on the additional payment.

You really need to learn how to use google. Here's one randomly selected result when searching "how much can I pay into a SIPP"

Contributing to your pension | AJ Bell Youinvest

It even has a nice picture:

[northernladuk]

Questions:
If I have personal savings of 40k.
If I open a SIPP now and dont pay 40k from the company, but put my own saved 40k.
Can I do this at all or it must be up to 8k (my salary)?
And will I get any tax back? Mind I havent paid any tax when on 8k salary.
How does this work?

You are clearly struggling badly with this whole thing so instead of asking a few high level questions you need a better low level grasp of this so I would say you need ot go ask a professional. Might seem like a simple question but it's asking to explain the whole thing to you. You really need to get this right so either do some research online or chat to your accountant or friendly IFA. Asking a bunch of contractors to teach you the basic of pensions isn't the best start.

[win10]

Questions:
If I have personal savings of 40k.
If I open a SIPP now and dont pay 40k from the company, but put my own saved 40k.
Can I do this at all or it must be up to 8k (my salary)?
And will I get any tax back? Mind I havent paid any tax when on 8k salary.
How does this work?

[sludgesurfer]

Any more insight on the other questions will be appreciated.

Go to this site. Read it. Particularly the platform comparison table.

Monevator — Make more money, invest profitably, retire early

[rootsnall]

Other important thing. Are SIPP pots protected if the provider/investment fund went kaput? I have read they are by the state for up to £85k. This doesnt of course cover bad investment. Is that so?

How are my investments protected?

Would I lose my pension if my investing platform goes bust? | This is Money