Hi,
I am currently receiving a Police Pension, a Local Government Pension and in the next few days the State pension. I am not employed.
I am thinking of opening a IE SIPP and putting in the proceeds of my house sale (I will be living elsewhere). Am I right in thinking I can put in the current years £60,000 allowance from the proceeds of the house sale and also the previous 3 years, so a total of £240,000 into the SIPP in the first year?
Also, how is this achieved in a practical sense? I imagine the app or website will say £60,000 is my lot. Is there a special way of achieving this? Thanks in advance
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Do remember that the £60,000 limit only applies if you receive a salary income of more than £60,000 in every year. The limit is 100% of each year’s income (up to £60,000 per year).
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Thanks for the reply. My only income is from my pensions not from a job, so how do you work out how much you can invest?
Unfortunately that is simple. £zero because it is 100% of your salary, which itself is £zero. However, there is a de minimis limit of £3,600 gross (£2,880 net) per year, i.e. you can pay up to £2,880 and HMRC top it up by (up to £720).
Note that if you are receiving a salary income (for example from another job) then you can pay 100% of that (or rather 80% net).
Since your Police Pension is likely to be a Defined Benefit scheme then this will not apply to you, but for those that have started receiving an income from a SIPP then they have to comply with a Money purchase annual allowance of £10,000 (gross) for future pension contributions.
I strongly suggest that you seek advice that pertains to your circumstances.
To answer your earlier question, for any contributions IE will need your NI number and that will appear on your Tax Return. If you have paid more than 100% of any salary (or above your de minimis limit) into a SIPP then you will pay Income Tax at your marginal rate on that contribution and/or there will be other penalties applied by HMRC.
I assume that you have used all your ISA allowance for 2025/26. If not put £20,000 into an ISA NOW and then £20,000 for each tax year from now on. The rest has to sit in a GIA.
In order to avoid CGT and Income Tax on that size of cash then you have to investigate exotic investments such as VCTs or offshore bonds.
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Thank you for this comprehensive reply. Although I don’t like it, I now know where I stand. The initial research doesn’t immediately show this, so your answer has saved me a lot of time. Back to ISA’s (S&S, not cash) and maybe even Premium Bonds. At least they are straight forward. Thanks again
No problem. I am in a very similar situation, so I have done a lot of research.
You implied that you have at least £240,000 to invest.
As I mentioned ISAs only let you invest £20,000 per year.
Premium Bonds only have a maximum holding of £50,000. So there is still a sizeable amount that cannot be put behind a tax wrapper. I should also mention that the effective interest rate for Premium Bonds is now only 3.3%. Depending on your marginal Income Tax rate, on average, it may be more beneficial to get a higher interest rate and/or interest in a GIA and then pay the Income Tax/Dividend Tax/CGT on it.
Ah, I haven’t got quite that much unfortunately, that was just £60,000 plus 3 years of unused pension contribution.
As you say, I will just have to keep adding £20,000 a year until I can transfer all the money from either a general investment account or Premium Bond account. There’s always a chance of a big prize. Again thanks for the insights.
Obviously you can put £40,000 into Premium Bonds and remove £20,000 in years 2 and 3 to go to your ISA.
Do not forget paying £2,880 into your SIPP each year. If your marginal Income Tax rate is 40% or higher then include that in your self-assessment return as you will get some Income Tax back on your SIPP investment.