Tax Relief
All allowable contributions to pension plans enjoy tax relief at your marginal
rate of tax. This means that a basic rate tax payer who wants to contribute
£ 1,000 in to a personal pension will only have to actually invest
£ 780 because the tax relief is £ 220. Higher rate tax payers
can claim a further 18% tax relief through their self assessment.
If you are making personal contributions you can pay the net amount and
the SIPP provider will recover the tax relief. However all employer contributions
are paid gross and the employer will claim tax relief through the company.
Personal Contributions
The table below sets out the main points.
- The maximum contribution will be 100% of
earnings up to a maximum.
- The maximum contribution for individuals will be £ 215,000
for the year 2006/07.
- It is important to remember that although there are generous contribution
limits, only pension funds below the Lifetime
Allowance will benefit from tax relief.
The existing limits for Self Employed Pensions (Section 226 policies) will
apply until April 2006 and as well as the excisting rules for carry back
Employer Contributions
Your employer can make contributions into your SIPP but the total of all employer and personal contributions must not exceed the annual limit