Making Contributions

What happens if I have an income of more than £150,000?

Individuals with high incomes may have a tapered annual allowance. You are counted as a high income individual if you have a "threshold income" of more than £110,000 for the tax year, or an "adjusted income" of more than £150,000. Your threshold income is your annual income before tax, less any personal pension contributions and ignoring any employer contribution. If your threshold income is more than £110,000, you will need to check your adjusted income. 

Your adjusted income is worked out by taking all income that you are taxed on - including dividends, savings interest and rental income, before tax - plus the value of your own and any employer pension contributions. 

Your annual allowance will reduce by £1 for every £2 that your "adjusted income" exceeds £150,000. The maximum reduction is £30,000 which reduces the annual allowance to £10,000 but only once your adjusted income reaches £210,000. 

Carry Forward

You may be allowed to exceed your annual allowance of £40,000 and still receive tax relief if you have not used your full SIPP allowance in any of the past three years. To carry forward, you must have:

• Been a member of a pension scheme in each tax year from which you carry forward.
• Used your full annual allowance in the current tax year.
• Contributed less than £40,000 in one or more of the last three tax years (including personal and employer contributions).
• Earned at least the amount you are contributing in that tax year, if you are making personal SIPP contributions.

SIPP minimum contribution amount

There is no minimum contribution for your SIPP. With an ii SIPP, you or your employer can make regular investments into your SIPP from as little as £25 per month. Any unused allowance may be carried forward for up to three years, if other conditions are met. You can easily make contributions via your online account using your debit card. To make a personal contribution via bank transfer or arrange contributions from your employer or another person, simply complete an ii SIPP contribution form. 

Can I contribute to a pension if I am not earning?

If you do not have any earnings in the tax year, you can still make SIPP contributions of up to £2,880 and receive tax relief of up to £720, giving you a total of £3,660.  If you have begun to drawdown income from your SIPP, you can contribute up to £4,000 per tax year.

Can my employer contribute to my SIPP?

Your employer can contribute to your SIPP, alongside or instead of a workplace pension. Contributions can be made regularly, or as a lump sum. If your employer pays a chunk of your salary directly into your SIPP, you may benefit, as you will not have to pay National Insurance on that sum. Employer contributions count towards your annual allowance but are not limited by your earnings. To arrange contributions from your employer, simply complete an ii SIPP contribution form. 

Can I contribute more than my allowance?

If you contribute more than your allowance, you will not receive any tax relief, and may also be subject to an annual allowance charge, which will be added to the rest of your taxable income for the tax year. The only time you can contribute more than your SIPP contribution limit is if you qualify for "carry forward". 

Can I still pay into a SIPP if I have already accessed my pension?

If you have accessed your SIPP and taken your tax-free lump sum, you are still able to pay in up to £4,000 per tax year. Alternatively, if you have retired but not yet begun to take an income from your pension, you can contribute up to £2,880 per tax year. All SIPP contributions will be tested against your lifetime allowance.