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Pension relief - personal contribution


afly
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I'm completely confused on this guys so I'm hoping you can help

I'm going to be bringing enough to put me into the higher rate. I can barely stomach the 40% but the double whammy of losing child benefit is a total kick in the balls :CryBaby:

Now as far as I understand it pension contributions come off gross salary. So if I earn 85k and stick 35k in SIPP, my taxable is 50k  == basic rate benefit scrounger

My employer & i put some in a DC but I wouldn't  want to put any more into their terrible scheme. 

So my question. Can i just take my received net income, chuck amounts > 54k'ish into a SIPP and then the government puts the stolen tax back on? When does it do this and how do they know what should be topped up 20% and what should be 40%??

 Do I have to put the monies into the pension before year end (apr)? I don't file until the following January usually, would I have to wait that long before seeing any top up?

Any help appreciated 

 

 

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Pretty much that.

The mechanics are if you want to put in £1k then you write a cheque for £800 (to, say, HL) then three months later they add another £200.

You get another £200 in cash back when you put in your tax return. And yes I do complete mine in April.

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On 11/10/2019 at 16:00, afly said:

y employer & i put some in a DC but I wouldn't  want to put any more into their terrible scheme

Just remember, most employers pension schemes cover the running costs thus saving you at least 1.5% (maybe more if they have some managed funds)....so is their really that bad? I.e. a) do you think you have the skills to outperform it by at least that?, and b) do you want to spend your leisure time doing it?...

...if you want the thrill/challenge of trading in individual shares why not do this through a S&S isa with some of your spare salary?

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17 hours ago, MrXxxx said:

Just remember, most employers pension schemes cover the running costs thus saving you at least 1.5% (maybe more if they have some managed funds)....so is their really that bad? I.e. a) do you think you have the skills to outperform it by at least that?, and b) do you want to spend your leisure time doing it?...

...if you want the thrill/challenge of trading in individual shares why not do this through a S&S isa with some of your spare salary?

Actually that costs aspect isn't something I had thought of, that's an excellent point just there. Sadly the options really are just shit. They only offer funds and they won't tell me what makes up the fund only what they 'aim to acheive'. Copy/Paste below.

So I suppose the tricky bit is you need to calculate your return prior to the year end to know how much to pay into the pension. I have accountant linked to a small biz I have been running over the years who does my return but they wouldn't even start looking at it until the period is over

---

L&G DC pension options

 

135 matching funds
Cautious Managed Lifestyle Profile
Consensus 10 Year Lifestyle Profile
Consensus 3 Year Lifestyle Profile
Consensus 5 Year Lifestyle Profile
Consensus Index Lifestyle
Consensus Index/Over 15 Year Gilts 6 Year LSP
Consensus Index/Over 15 Year Gilts 7 Year LSP
Consensus/Over 15 Year Gilts Index 5 Year LSP
Distribution/Over 15 Year Gilts 10 Year LSP
Dual Fund Lifestyle Profile
Gbl FW 50:50 Cur Hgd/AAA-AA-A CorpBond LSP
Glb Eq 50:50 /Consensus 10 Year LSP
Glb Eq 70:30 Index/Over 5 Yr IL Gilts 5 Yr LSP
Glb Eq FW 50:50 Index/Over 15 Yr Gilts 11 Yr LSP
Glb Eq FW 50:50 Index/Over 5 Yr IL Gilts 6 Yr LSP
Glb Eq MW 30:70 Idx 75% Cur Hgd/AAA-AA-A CrpBnd LS
Glb Eq MW 30:70 Idx 75% Curr Hedged 10 Yr AVC LSP
Glb Eq MW 30:70 Index 75% GBP Cur Hedged 10 y LSP
Glb Equity FW 50:50 Idx/Over 15 Yr Gilts 10 y LSP
Glob Eq 70:30/Over 15 Yr Gilts 5 Year Lifestyle
Global Eq FW 50:50 /Over 5 Yr IL Gilts 11 Yr LSP
Global Equity 70:30 Index Lifestyle Profile
Global Equity 70:30 Index/Fixed Interest LSP
Global Equity 70:30 Index/Index-Linked Gilt LSP
Global Equity Fixed Weights 50:50 Index Lifestyle
Global Equity FW 50:50 Index/Fixed Interest LSP
Global Equity FW 50:50 Index/Property 10 Yr LSP
Global Equity FW 50:50 Index/Property 7 Yr LSP
Global Equity FW 50:50 Indx/Over 15 y Glts 5 y LSP
Global Equity FW 50:50 Indx/Pre-Retiremnt 7 y LSP
Global Equity FW 50:50/Pre-Retirement 10 y LSP
Global Equity FW 60:40 Indx 10 y Lifestyle Profile
Global Equity FW 60:40/Fixed Interest 5 y LSP
Global Equity FW 60:40/Over 15 y Gilts 5 y LSP
L&G PMC 2015 - 2020 Pathway Fund 3
L&G PMC 2020 - 2025 Pathway Fund 3
L&G PMC 2025 - 2030 Pathway Fund 3
L&G PMC 2030 - 2035 Pathway Fund 3
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L&G PMC 2040 - 2045 Pathway Fund 3
You're already invested in this fund
L&G PMC 2045 - 2050 Pathway Fund 3
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L&G PMC 2055 - 2060 Pathway Fund 3
L&G PMC 2060 - 2065 Pathway Fund 3
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L&G PMC AAA-AA Fixed Int O15 Yr Target Duration 3
L&G PMC AAA-AA Fxd Int All Stks Target Duration 3
L&G PMC AAA-AA-A Corp Bond All Stocks Index 3
L&G PMC AAA-AA-A Corp Bond Over 15 Yr Index 3
L&G PMC All Stocks Gilts Index 3
L&G PMC All Stocks Index Linked Gilts Index 3
L&G PMC Artemis Income 3
L&G PMC Asia Pacific (ExJap) Dev Equity Index 3
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L&G PMC Asian Income Fund 3
L&G PMC BMO Responsible Global Equity Fund 3
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L&G PMC Cash 3
L&G PMC Consensus Index 3
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L&G PMC Diversified 3
L&G PMC Dynamic Bond 3
L&G PMC Dynamic Diversified Fund 3
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L&G PMC Fixed Interest 3
L&G PMC Future World Fund 3
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L&G PMC Global Eqty Fixed Weights 50:50 Index 3
L&G PMC Global Eqty Fixed Weights 60:40 Index 3
L&G PMC Global Equity 70:30 Index 3
L&G PMC Global Equity Market Weights 30:70 Index 3
L&G PMC Global FW 50:50 Idx GBP Currency Hedged 3
L&G PMC Global Real Estate Equity Index 3
L&G PMC Growth 3
L&G PMC Henderson Diversified Alternatives 3
L&G PMC High Income 3
L&G PMC HSBC Islamic Global Equity Index Fund 3
L&G PMC Index-Linked Gilt 3
L&G PMC International 3
L&G PMC Janus Henderson Preference & Bond Fund 3
L&G PMC Japan Equity Index 3
L&G PMC Kames Ethical Equity 3
L&G PMC Kames High Yield Bond 3
L&G PMC Kames Strategic Bond 3
L&G PMC Lazard Emerging Markets 3
L&G PMC M&G PP All Stocks Corporate Bond 3
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L&G PMC Managed 3
L&G PMC MFS Meridian Global Equity 3
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L&G PMC Over 15 Year Gilts Index 3
L&G PMC Over 5 Year Index Linked Gilts Index 3
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L&G PMC UK Equity 5% Capped Passive 3
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L&G PMC World Emerging Markets Equity Index 3
Legal & General Annuity Lifestyle
Legal & General Cash Lifestyle
Legal & General Drawdown Lifestyle
Managed Lifestyle Profile
Multi-Asset Lifestyle
Triple Fund Lifestyle Profile
Triple Index/Pre-Retirement Lifestyle Profile
UK Equity 5% Capped Passive/Bond/Gilts 10 Yr LSP
UK Equity Idx/Global Equity FW 50:50 Idx 10 y LSP
UK Equity Index 10 Year Lifestyle Profile
UK Equity Index 5 Year Lifestyle Profile

 

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4 hours ago, afly said:

Actually that costs aspect isn't something I had thought of, that's an excellent point just there. Sadly the options really are just shit. They only offer funds and they won't tell me what makes up the fund only what they 'aim to acheive'. Copy/Paste below.

So I suppose the tricky bit is you need to calculate your return prior to the year end to know how much to pay into the pension. I have accountant linked to a small biz I have been running over the years who does my return but they wouldn't even start looking at it until the period is over

---

L&G DC pension options

 

135 matching funds
Cautious Managed Lifestyle Profile
Consensus 10 Year Lifestyle Profile
Consensus 3 Year Lifestyle Profile
Consensus 5 Year Lifestyle Profile
Consensus Index Lifestyle
Consensus Index/Over 15 Year Gilts 6 Year LSP
Consensus Index/Over 15 Year Gilts 7 Year LSP
Consensus/Over 15 Year Gilts Index 5 Year LSP
Distribution/Over 15 Year Gilts 10 Year LSP
Dual Fund Lifestyle Profile
Gbl FW 50:50 Cur Hgd/AAA-AA-A CorpBond LSP
Glb Eq 50:50 /Consensus 10 Year LSP
Glb Eq 70:30 Index/Over 5 Yr IL Gilts 5 Yr LSP
Glb Eq FW 50:50 Index/Over 15 Yr Gilts 11 Yr LSP
Glb Eq FW 50:50 Index/Over 5 Yr IL Gilts 6 Yr LSP
Glb Eq MW 30:70 Idx 75% Cur Hgd/AAA-AA-A CrpBnd LS
Glb Eq MW 30:70 Idx 75% Curr Hedged 10 Yr AVC LSP
Glb Eq MW 30:70 Index 75% GBP Cur Hedged 10 y LSP
Glb Equity FW 50:50 Idx/Over 15 Yr Gilts 10 y LSP
Glob Eq 70:30/Over 15 Yr Gilts 5 Year Lifestyle
Global Eq FW 50:50 /Over 5 Yr IL Gilts 11 Yr LSP
Global Equity 70:30 Index Lifestyle Profile
Global Equity 70:30 Index/Fixed Interest LSP
Global Equity 70:30 Index/Index-Linked Gilt LSP
Global Equity Fixed Weights 50:50 Index Lifestyle
Global Equity FW 50:50 Index/Fixed Interest LSP
Global Equity FW 50:50 Index/Property 10 Yr LSP
Global Equity FW 50:50 Index/Property 7 Yr LSP
Global Equity FW 50:50 Indx/Over 15 y Glts 5 y LSP
Global Equity FW 50:50 Indx/Pre-Retiremnt 7 y LSP
Global Equity FW 50:50/Pre-Retirement 10 y LSP
Global Equity FW 60:40 Indx 10 y Lifestyle Profile
Global Equity FW 60:40/Fixed Interest 5 y LSP
Global Equity FW 60:40/Over 15 y Gilts 5 y LSP
L&G PMC 2015 - 2020 Pathway Fund 3
L&G PMC 2020 - 2025 Pathway Fund 3
L&G PMC 2025 - 2030 Pathway Fund 3
L&G PMC 2030 - 2035 Pathway Fund 3
L&G PMC 2035 - 2040 Pathway Fund 3
L&G PMC 2040 - 2045 Pathway Fund 3
You're already invested in this fund
L&G PMC 2045 - 2050 Pathway Fund 3
L&G PMC 2050 - 2055 Pathway Fund 3
L&G PMC 2055 - 2060 Pathway Fund 3
L&G PMC 2060 - 2065 Pathway Fund 3
L&G PMC 2065 - 2070 Pathway Fund 3
L&G PMC AAA-AA Fixed Int O15 Yr Target Duration 3
L&G PMC AAA-AA Fxd Int All Stks Target Duration 3
L&G PMC AAA-AA-A Corp Bond All Stocks Index 3
L&G PMC AAA-AA-A Corp Bond Over 15 Yr Index 3
L&G PMC All Stocks Gilts Index 3
L&G PMC All Stocks Index Linked Gilts Index 3
L&G PMC Artemis Income 3
L&G PMC Asia Pacific (ExJap) Dev Equity Index 3
L&G PMC Asia Pacific Ex Jap Equity Index 3
L&G PMC Asian Income Fund 3
L&G PMC BMO Responsible Global Equity Fund 3
L&G PMC BMO Responsible UK Income Fund 3
L&G PMC Cash 3
L&G PMC Consensus Index 3
L&G PMC Distribution 3
L&G PMC Diversified 3
L&G PMC Dynamic Bond 3
L&G PMC Dynamic Diversified Fund 3
L&G PMC Equity 3
L&G PMC Ethical Global Equity Index 3
L&G PMC Ethical UK Equity Index 3
L&G PMC Europe (Ex-UK) Equity Index 3
L&G PMC European 3
L&G PMC Far Eastern 3
L&G PMC Fixed Interest 3
L&G PMC Future World Fund 3
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L&G PMC Global Eqty Fixed Weights 50:50 Index 3
L&G PMC Global Eqty Fixed Weights 60:40 Index 3
L&G PMC Global Equity 70:30 Index 3
L&G PMC Global Equity Market Weights 30:70 Index 3
L&G PMC Global FW 50:50 Idx GBP Currency Hedged 3
L&G PMC Global Real Estate Equity Index 3
L&G PMC Growth 3
L&G PMC Henderson Diversified Alternatives 3
L&G PMC High Income 3
L&G PMC HSBC Islamic Global Equity Index Fund 3
L&G PMC Index-Linked Gilt 3
L&G PMC International 3
L&G PMC Janus Henderson Preference & Bond Fund 3
L&G PMC Japan Equity Index 3
L&G PMC Kames Ethical Equity 3
L&G PMC Kames High Yield Bond 3
L&G PMC Kames Strategic Bond 3
L&G PMC Lazard Emerging Markets 3
L&G PMC M&G PP All Stocks Corporate Bond 3
L&G PMC Majedie UK Equity 3
L&G PMC Managed 3
L&G PMC MFS Meridian Global Equity 3
L&G PMC Multi-Asset 3
L&G PMC Newton Global Income 3
L&G PMC Newton Real Return Fund 3
L&G PMC North America Equity Index 3
L&G PMC North American 3
L&G PMC Over 15 Year Gilts Index 3
L&G PMC Over 5 Year Index Linked Gilts Index 3
L&G PMC Overseas Bond Index 3
L&G PMC Overseas Equity Consensus Index 3
L&G PMC Pre-Retirement 3
L&G PMC Pre-Retirement Inflation Linked Fund 3
L&G PMC Pre-Retirement Inflation Sensitive 3
L&G PMC Property 3
L&G PMC Real Income Builder 3
L&G PMC Retirement Income Multi-Asset 3
L&G PMC Standard Life Global Abs Return Strat 3
L&G PMC Sterling Liquidity 3
L&G PMC Stewart Investors Asia Pacific Leaders 3
L&G PMC Stewart Investors Glbl Emrg Mkt Ldrs 3
L&G PMC Threadneedle Dynamic Real Return Fund 3
L&G PMC Threadneedle Global Select 3
L&G PMC Threadneedle Managed Equity 3
L&G PMC UK Alpha 3
L&G PMC UK Equity 5% Capped Passive 3
L&G PMC UK Equity Index 3
L&G PMC UK Recovery 3
L&G PMC UK Smaller Companies 3
L&G PMC UK Smaller Companies Index 3
L&G PMC World (Ex-UK) Equity Index 3
L&G PMC World Emerging Markets Equity Index 3
Legal & General Annuity Lifestyle
Legal & General Cash Lifestyle
Legal & General Drawdown Lifestyle
Managed Lifestyle Profile
Multi-Asset Lifestyle
Triple Fund Lifestyle Profile
Triple Index/Pre-Retirement Lifestyle Profile
UK Equity 5% Capped Passive/Bond/Gilts 10 Yr LSP
UK Equity Idx/Global Equity FW 50:50 Idx 10 y LSP
UK Equity Index 10 Year Lifestyle Profile
UK Equity Index 5 Year Lifestyle Profile

 

Well, that narrows it down a bit! :-) :-) :-)

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VeryMeanReversion
On 11/10/2019 at 16:00, afly said:

 

My employer & i put some in a DC but I wouldn't  want to put any more into their terrible scheme. 

 

 

I had the same problem as you. With two kids, your effective marginal tax rate at 50K + would be

40% (income) + 2% (employee NI) + 12% (employer NI) + 17% (child benefit clawback) = Very painful. (Gets even worse with more kids and student loans)

So I use salary sacrifice with the employer giving me their NI savings.  I've got this set up at the last two companies I've worked for, didn't cost them anything.

This turns a ~70% marginal rate into a <15% one (assuming you are retiring with a basic rate income later).

The last problem is the DC scheme at work. The workaround for this is to use it anyway then partial transfer out into your preferred SIPP supplier. (Not all DC schemes allow partial transfers out, mine does). I do this once per year with Hargreaves Lansdown. They do the transfer-in for free and give cash-back as well. I take the cashback as a cheque rather than being added to SIPP (without more tax relief).

Then to minimise charges in my SIPP. I only use shares, ETF and investment trusts so don't pay the 0.45% fees on unit trusts pushed by their marketing. My fees a therefore capped at £200.

 

 

 

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  • 2 weeks later...
Bobthebuilder

Hi all,

SIPP newbie here, can i just check that i have got this right?

Self employed, gross earnings after costs say £20k. I can backdate 3 years so £60, i pay in £48k from say a savings account and the HMRC add £12k.

Sounds to good to be true.

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52 minutes ago, Bobthebuilder said:

Hi all,

SIPP newbie here, can i just check that i have got this right?

Self employed, gross earnings after costs say £20k. I can backdate 3 years so £60, i pay in £48k from say a savings account and the HMRC add £12k.

Sounds to good to be true.

I don't know the backdating rules so just dealing with the current year it isn't quite as good as you're suggesting.

Gross earnings: £20k

Less Personal allowance: £12.5k

Taxable pay: £7.5k

You can put into your SIPP and obtain tax relief for £7.5k gross.  This means that you write a cheque of £6k (80%) and HMRC adds £1.5k (20%).

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Bobthebuilder
3 minutes ago, Frank Hovis said:

I don't know the backdating rules so just dealing with the current year it isn't quite as good as you're suggesting.

Gross earnings: £20k

Less Personal allowance: £12.5k

Taxable pay: £7.5k

You can put into your SIPP and obtain tax relief for £7.5k gross.  This means that you write a cheque of £6k (80%) and HMRC adds £1.5k (20%).

Thank you Frank,

It was the personal allowance that seemed to good to be true, much appriciated for clearing that up.

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On 16/10/2019 at 13:05, afly said:

Actually that costs aspect isn't something I had thought of, that's an excellent point just there. Sadly the options really are just shit. They only offer funds and they won't tell me what makes up the fund only what they 'aim to acheive'. Copy/Paste below.

So I suppose the tricky bit is you need to calculate your return prior to the year end to know how much to pay into the pension. I have accountant linked to a small biz I have been running over the years who does my return but they wouldn't even start looking at it until the period is over

---

L&G DC pension options

 

135 matching funds
Cautious Managed Lifestyle Profile
Consensus 10 Year Lifestyle Profile
Consensus 3 Year Lifestyle Profile
Consensus 5 Year Lifestyle Profile
Consensus Index Lifestyle
Consensus Index/Over 15 Year Gilts 6 Year LSP
Consensus Index/Over 15 Year Gilts 7 Year LSP
Consensus/Over 15 Year Gilts Index 5 Year LSP
Distribution/Over 15 Year Gilts 10 Year LSP
Dual Fund Lifestyle Profile
Gbl FW 50:50 Cur Hgd/AAA-AA-A CorpBond LSP
Glb Eq 50:50 /Consensus 10 Year LSP
Glb Eq 70:30 Index/Over 5 Yr IL Gilts 5 Yr LSP
Glb Eq FW 50:50 Index/Over 15 Yr Gilts 11 Yr LSP
Glb Eq FW 50:50 Index/Over 5 Yr IL Gilts 6 Yr LSP
Glb Eq MW 30:70 Idx 75% Cur Hgd/AAA-AA-A CrpBnd LS
Glb Eq MW 30:70 Idx 75% Curr Hedged 10 Yr AVC LSP
Glb Eq MW 30:70 Index 75% GBP Cur Hedged 10 y LSP
Glb Equity FW 50:50 Idx/Over 15 Yr Gilts 10 y LSP
Glob Eq 70:30/Over 15 Yr Gilts 5 Year Lifestyle
Global Eq FW 50:50 /Over 5 Yr IL Gilts 11 Yr LSP
Global Equity 70:30 Index Lifestyle Profile
Global Equity 70:30 Index/Fixed Interest LSP
Global Equity 70:30 Index/Index-Linked Gilt LSP
Global Equity Fixed Weights 50:50 Index Lifestyle
Global Equity FW 50:50 Index/Fixed Interest LSP
Global Equity FW 50:50 Index/Property 10 Yr LSP
Global Equity FW 50:50 Index/Property 7 Yr LSP
Global Equity FW 50:50 Indx/Over 15 y Glts 5 y LSP
Global Equity FW 50:50 Indx/Pre-Retiremnt 7 y LSP
Global Equity FW 50:50/Pre-Retirement 10 y LSP
Global Equity FW 60:40 Indx 10 y Lifestyle Profile
Global Equity FW 60:40/Fixed Interest 5 y LSP
Global Equity FW 60:40/Over 15 y Gilts 5 y LSP
L&G PMC 2015 - 2020 Pathway Fund 3
L&G PMC 2020 - 2025 Pathway Fund 3
L&G PMC 2025 - 2030 Pathway Fund 3
L&G PMC 2030 - 2035 Pathway Fund 3
L&G PMC 2035 - 2040 Pathway Fund 3
L&G PMC 2040 - 2045 Pathway Fund 3
You're already invested in this fund
L&G PMC 2045 - 2050 Pathway Fund 3
L&G PMC 2050 - 2055 Pathway Fund 3
L&G PMC 2055 - 2060 Pathway Fund 3
L&G PMC 2060 - 2065 Pathway Fund 3
L&G PMC 2065 - 2070 Pathway Fund 3
L&G PMC AAA-AA Fixed Int O15 Yr Target Duration 3
L&G PMC AAA-AA Fxd Int All Stks Target Duration 3
L&G PMC AAA-AA-A Corp Bond All Stocks Index 3
L&G PMC AAA-AA-A Corp Bond Over 15 Yr Index 3
L&G PMC All Stocks Gilts Index 3
L&G PMC All Stocks Index Linked Gilts Index 3
L&G PMC Artemis Income 3
L&G PMC Asia Pacific (ExJap) Dev Equity Index 3
L&G PMC Asia Pacific Ex Jap Equity Index 3
L&G PMC Asian Income Fund 3
L&G PMC BMO Responsible Global Equity Fund 3
L&G PMC BMO Responsible UK Income Fund 3
L&G PMC Cash 3
L&G PMC Consensus Index 3
L&G PMC Distribution 3
L&G PMC Diversified 3
L&G PMC Dynamic Bond 3
L&G PMC Dynamic Diversified Fund 3
L&G PMC Equity 3
L&G PMC Ethical Global Equity Index 3
L&G PMC Ethical UK Equity Index 3
L&G PMC Europe (Ex-UK) Equity Index 3
L&G PMC European 3
L&G PMC Far Eastern 3
L&G PMC Fixed Interest 3
L&G PMC Future World Fund 3
L&G PMC Future World Multi-Asset Fund 3
L&G PMC Global Eqty Fixed Weights 50:50 Index 3
L&G PMC Global Eqty Fixed Weights 60:40 Index 3
L&G PMC Global Equity 70:30 Index 3
L&G PMC Global Equity Market Weights 30:70 Index 3
L&G PMC Global FW 50:50 Idx GBP Currency Hedged 3
L&G PMC Global Real Estate Equity Index 3
L&G PMC Growth 3
L&G PMC Henderson Diversified Alternatives 3
L&G PMC High Income 3
L&G PMC HSBC Islamic Global Equity Index Fund 3
L&G PMC Index-Linked Gilt 3
L&G PMC International 3
L&G PMC Janus Henderson Preference & Bond Fund 3
L&G PMC Japan Equity Index 3
L&G PMC Kames Ethical Equity 3
L&G PMC Kames High Yield Bond 3
L&G PMC Kames Strategic Bond 3
L&G PMC Lazard Emerging Markets 3
L&G PMC M&G PP All Stocks Corporate Bond 3
L&G PMC Majedie UK Equity 3
L&G PMC Managed 3
L&G PMC MFS Meridian Global Equity 3
L&G PMC Multi-Asset 3
L&G PMC Newton Global Income 3
L&G PMC Newton Real Return Fund 3
L&G PMC North America Equity Index 3
L&G PMC North American 3
L&G PMC Over 15 Year Gilts Index 3
L&G PMC Over 5 Year Index Linked Gilts Index 3
L&G PMC Overseas Bond Index 3
L&G PMC Overseas Equity Consensus Index 3
L&G PMC Pre-Retirement 3
L&G PMC Pre-Retirement Inflation Linked Fund 3
L&G PMC Pre-Retirement Inflation Sensitive 3
L&G PMC Property 3
L&G PMC Real Income Builder 3
L&G PMC Retirement Income Multi-Asset 3
L&G PMC Standard Life Global Abs Return Strat 3
L&G PMC Sterling Liquidity 3
L&G PMC Stewart Investors Asia Pacific Leaders 3
L&G PMC Stewart Investors Glbl Emrg Mkt Ldrs 3
L&G PMC Threadneedle Dynamic Real Return Fund 3
L&G PMC Threadneedle Global Select 3
L&G PMC Threadneedle Managed Equity 3
L&G PMC UK Alpha 3
L&G PMC UK Equity 5% Capped Passive 3
L&G PMC UK Equity Index 3
L&G PMC UK Recovery 3
L&G PMC UK Smaller Companies 3
L&G PMC UK Smaller Companies Index 3
L&G PMC World (Ex-UK) Equity Index 3
L&G PMC World Emerging Markets Equity Index 3
Legal & General Annuity Lifestyle
Legal & General Cash Lifestyle
Legal & General Drawdown Lifestyle
Managed Lifestyle Profile
Multi-Asset Lifestyle
Triple Fund Lifestyle Profile
Triple Index/Pre-Retirement Lifestyle Profile
UK Equity 5% Capped Passive/Bond/Gilts 10 Yr LSP
UK Equity Idx/Global Equity FW 50:50 Idx 10 y LSP
UK Equity Index 10 Year Lifestyle Profile
UK Equity Index 5 Year Lifestyle Profile

 

Many of those funds are just a L&G wrapper around the underlying fund e.g. Kames Ethical Equity.  Your company online pension account should give you some data on it.  If not then go to HL.co.uk or another stockbroker/investment site and look up the fund there.  You should be able to find plenty of data on performance and underlying shares/sectors etc.

Not all those funds are shit.  I have some of them and the annual return on them has been pretty good.

How much does your employer put in?  How much do you contribute?  Does your employer contribute extra if you do e.g. match % (mine does, me 3%, company 10%, then they will match % for % up to me 7% and them 14%).

Does your company contribution come via Salary Sacrifice?  If it does then you are also getting your NI contributions paid into your pension.  If you put it into your own SIPP you don't get this.  Find out from your company / payslip if it is Salary Sacrifice.

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Bobthebuilder
21 hours ago, Frank Hovis said:

I don't know the backdating rules so just dealing with the current year it isn't quite as good as you're suggesting.

Gross earnings: £20k

Less Personal allowance: £12.5k

Taxable pay: £7.5k

You can put into your SIPP and obtain tax relief for £7.5k gross.  This means that you write a cheque of £6k (80%) and HMRC adds £1.5k (20%).

I spoke to the pensions advisory service today and thought it would be a good idea to share what they told me in case anyone else is interested.

Question 1, I opened my SIPP in this current tax year so i cannot claim for previose years but i can carry unused relief forward from now.

Question 2, For a SIPP you can claim tax relief on the entire taxable earnings including the personal allowance.

I am amazed at that but very happy.

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19 hours ago, Bobthebuilder said:

I spoke to the pensions advisory service today and thought it would be a good idea to share what they told me in case anyone else is interested.

Question 1, I opened my SIPP in this current tax year so i cannot claim for previose years but i can carry unused relief forward from now.

Question 2, For a SIPP you can claim tax relief on the entire taxable earnings including the personal allowance.

I am amazed at that but very happy.

I'm not saying that's wrong but I will follow that up.

It would however explain how I apparently paid minus £6k of tax a few years ago.

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20 hours ago, Bobthebuilder said:

Question 1, I opened my SIPP in this current tax year so i cannot claim for previose years but i can carry unused relief forward from now.

I never thought of that.  A bit of a surprise as I didn't think whether you had a pension account (any approved one would do) at the time mattered but seems it does.  Just a couple of potential gotchas (please check validity): You have to have enough income in the current year to use any of the carried forward allowances (i.e. actual prior year earnings appear not to be relevant but best to check) and you use the current year's pension tax relief allowance before any carry forward so may not be able to use the oldest year's carry forward if you have insufficient current income (which means you lose it next year but, rolling forward, gain what you didn't use this year).

20 hours ago, Bobthebuilder said:

Question 2, For a SIPP you can claim tax relief on the entire taxable earnings including the personal allowance.

Yes.  Technically, they are called "Relevant Earnings" which you can look up for a definition (e.g. https://www.rossmartin.co.uk/private-client-a-estate-planning/income-losses-claims-reliefs/1034-relevant-earnings-for-pensions-purposes) but for most people this would probably be their salary (or self employed income).  REs have nothing to do with allowances.  Generally, you can claim relief up to the lower of £40,000 or REs (with a £3,600 or so minimum for those with no RE).  This is before any adjustment for any carry forward of unused relief.  Various restrictions for cases like if you have taken money out of your pension, have very high earnings, etc but that's the base case as I understand it.  Note contributions are usually all contributions (e.g. includes those paid by any employer, etc) but there is a rule on employer contributions and carry forward, etc to complicate matters.

Basic tax relief calculator: https://www.hl.co.uk/pensions/tax-relief/calculator

Basic tax relief guidance notes: https://www.hl.co.uk/free-guides/tax-relief

Tax relief carry forward calculator: https://www.hl.co.uk/pensions/contributions/carry-forward-rule/annual-allowance-calculator

Tax relief carry forward guidance notes: https://www.hl.co.uk/pensions/contributions/carry-forward-rule

Self employeds with irregular income may particularly benefit from a chat with their accountant given the relative complexity.

Disclaimer: Please confirm the accuracy of the above before relying on any of it.

Edited by Harley
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On 01/11/2019 at 16:26, Bobthebuilder said:

I spoke to the pensions advisory service today and thought it would be a good idea to share what they told me in case anyone else is interested.

Question 1, I opened my SIPP in this current tax year so i cannot claim for previose years but i can carry unused relief forward from now.

Question 2, For a SIPP you can claim tax relief on the entire taxable earnings including the personal allowance.

I am amazed at that but very happy.

Regarding BB`s Q 2 above, just read something for those very close to retirement/early retirement.

Although everyone has an Annual maximum allowance of £40k for contributions into a pension, this is not applied in the year that you start drawing your pension I.e. If I planned to retire/draw my pension on 01 Nov 2020 I could put more than £40k by 31st Oct 2020...this said, I assume it would be subject to your Lifetime Allowance (the max sum you can have in your pension before getting taxed on it) of £1m....so, say upto 2019 your total pension holdings were £950k and your salary was £50k, you could put in £50k in the year 2020...or a more extreme example, pension=£650k, you earn £400k (well we can dream!), you could put in £350 in the final year (2020).

Note, not financial advice just my interpretation DYOR etc.

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  • 3 weeks later...
On 03/11/2019 at 09:17, MrXxxx said:

Regarding BB`s Q 2 above, just read something for those very close to retirement/early retirement.

Although everyone has an Annual maximum allowance of £40k for contributions into a pension, this is not applied in the year that you start drawing your pension I.e. If I planned to retire/draw my pension on 01 Nov 2020 I could put more than £40k by 31st Oct 2020...this said, I assume it would be subject to your Lifetime Allowance (the max sum you can have in your pension before getting taxed on it) of £1m....so, say upto 2019 your total pension holdings were £950k and your salary was £50k, you could put in £50k in the year 2020...or a more extreme example, pension=£650k, you earn £400k (well we can dream!), you could put in £350 in the final year (2020).

Note, not financial advice just my interpretation DYOR etc.

Just to confirm you have to have the earnings in that year to do this?  So, per the example, £50k max, that being your earnings for that year.  Or does this other restriction not apply?

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On 23/11/2019 at 11:38, Harley said:

Just to confirm you have to have the earnings in that year to do this?  So, per the example, £50k max, that being your earnings for that year.  Or does this other restriction not apply?

I assume that you have to have the earnings in that year, as a) previous years have a ceiling, and b) once they have gone through the tax system they would probably be treated like any savings...just my assumptions though, I could have it completely wrong so DYOR to confirm.

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  • 1 month later...

Being a higher rate taxpayer I'm trying to claim all the high income tax by contributing to SIPP... using the HL Calculator and some trial&errors calculations it looks like I should contribute approx £31600 / pay £25280 (my annual income is £75k and I live in Scotland so the brackets and rates are more complex here)

Question: my employer also pays into a private pension, at the end of this tax year it will be approx £1300 (plus £1700 of my contributions) - do these numbers have any impact on how much should I pay into my SIPP? My goal is to claim back all the income tax that I've paid in the higher rate and not to pay into SIPP anything more than needed...

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Bobthebuilder
4 hours ago, BearyBear said:

Being a higher rate taxpayer I'm trying to claim all the high income tax by contributing to SIPP... using the HL Calculator and some trial&errors calculations it looks like I should contribute approx £31600 / pay £25280 (my annual income is £75k and I live in Scotland so the brackets and rates are more complex here)

Question: my employer also pays into a private pension, at the end of this tax year it will be approx £1300 (plus £1700 of my contributions) - do these numbers have any impact on how much should I pay into my SIPP? My goal is to claim back all the income tax that I've paid in the higher rate and not to pay into SIPP anything more than needed...

I found the Pensions Advisery Service very helpful for the questions i had, you can speak to an advisor live online.

 

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9 hours ago, BearyBear said:

Being a higher rate taxpayer I'm trying to claim all the high income tax by contributing to SIPP... using the HL Calculator and some trial&errors calculations it looks like I should contribute approx £31600 / pay £25280 (my annual income is £75k and I live in Scotland so the brackets and rates are more complex here)

Question: my employer also pays into a private pension, at the end of this tax year it will be approx £1300 (plus £1700 of my contributions) - do these numbers have any impact on how much should I pay into my SIPP? My goal is to claim back all the income tax that I've paid in the higher rate and not to pay into SIPP anything more than needed...

I would assume it would, as all pension contributions contribute to your AA...as an example, some company pension schemes have a DB up to a ceiling with DC after that, the DC sum is simply what's been paid in over the year but the DB annual benefit is multiplied by a factor (usually x8-11) to give an estimated value that is then added  to the DC sum.

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Annual allowance is £40k though IIRC there are bring forward options from unused past years.

Employer pensions come out of this in the way that @MrXxxx noted so that's £3,000 out if it's a DC pension meaning £37k left.

https://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/pensions-and-tax/the-annual-allowance

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On 02/11/2019 at 12:56, Frank Hovis said:

I'm not saying that's wrong but I will follow that up.

It would however explain how I apparently paid minus £6k of tax a few years ago.

No. That’s correct. You get the 25% top up on all contributions. This is capped at the higher of a gross contribution of £40k (so £32k before the tax relief top up) or your earnings for that year. If your earnings are less than £3,600 then you can put up to £2,880 into a pension and receive the 25% top up (which would take it up to £3,600).

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6 minutes ago, Castlevania said:

No. That’s correct. You get the 25% top up on all contributions. This is capped at the higher of a gross contribution of £40k (so £32k before the tax relief top up) or your earnings for that year. If your earnings are less than £3,600 then you can put up to £2,880 into a pension and receive the 25% top up (which would take it up to £3,600).

Excellent news.

Well that's £20k going into a SIPP in March as my last bit of free government money :)

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16 hours ago, Frank Hovis said:

Excellent news.

Well that's £20k going into a SIPP in March as my last bit of free government money :)

Be careful about living in Scotland and the tapering of the allowance for high income (note income, not just salary) people.  Also, is it not 20% auto relief, not 25%?   And note the correct calculation (it's 20%(?) of the gross so you have to be careful with the maths).

https://www.hl.co.uk/pensions/tax-relief/calculator

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21 hours ago, Frank Hovis said:

Annual allowance is £40k though IIRC there are bring forward options from unused past years.

Employer pensions come out of this in the way that @MrXxxx noted so that's £3,000 out if it's a DC pension meaning £37k left.

https://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/pensions-and-tax/the-annual-allowance

You can use any of the shortfall of your yearly AA(£40k) from the previous three years only...any years before that are then lost, so best use it while you can. Also, if you are in this situation and have gone over the current years AA (say by £10k) they then take from the most recent year first I.e

2019/20 £50k so £10k over.

2018/19 £35k so £5k shortfall

2017/18 £35k so £5k shortfall

2016/17 £30k so £10k shortfall

SO your £10k overspend in 2019/20 would be accounted for with 2018/19 & 2017/18 NOT from 2016/17. In the following tax year you would have zero backyears allowance as 2016/17 would become obsolete. If however in 2019/20 your overspend was £20k the additional £10k would be taken from 2016/17.

As always DYOR as government are always `moving the goalposts`, and this is my understanding.

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