Over contributed to Sipp (so far.) Tax implications etc?

General
1

Hi all,

I set up an IE SIPP a month or so ago, I haven’t received tax rebates yet, but I understand it takes a few weeks, so no problem there. I have however contributed about £12k more than my SIPP allowance (based on what was left over from last year, plus this years gross earnings so far.) I have a PAYE job, and am also self employed. I’m a lower tax rate payer.

Exceeding my allowance isn’t necessarily a problem, as I expect to earn more than £12k before April 5th.

If for some I reason I don’t though, HMRC will expect a refund of the excess tax relief after I’ve submitted my self assessment form after April 5th. Would that refund include any returns made on that portion of my SIPP’s value? Would they expect me to withdraw the amount over my allowance from the SIPP? How would I go about withdrawing it from my SIPP in this case? (I’m over 55.)

Another point; I assume I don’t get tax relief for tax I haven’t paid? Ie the proportion of my earnings that fall below £12,570, is that correct?

Also, as one of my contributions to the SIPP was greater than £10k, should I inform HMRC as per the Govt.uk website) or will IE do that for me? I’ve read the T and C’s, I understand that it’s my responsibility not to exceed my allowance.

Thanks

3

Thanks, good link.

I’d forgotten about the implications of withdrawing from a sipp, it reduces the allowance going forward in some way, if I remember correctly. You seem to have read the government website the same way I have, ie that the limit is £60k maximum, with tax relief only on the gross income bit. So that still leaves me wondering if that’s the correct interpretation, as almost everyone else says its £60k or gross income, whichever is smallest; which isn’t explicitly stated anywhere that I can find.

If it is the case that my contribution limit is £60k, that seems unusually generous as I can then buy/sell stocks and make a profit on them inside the sipp without being subject to tax. Not like the government to pass up extra tax revenue…

6

That’s surprisingly good news then. I’ll wait for IE to obtain my tax relief for me on my smaller contributions, and see if the large one goes through. If it doesn’t, I’ll send a letter to HMRC requesting tax relief if it’s available.

I think there’s an advantage in topping up my sipp past my gross earnings, rather than just diverting part of my earnings into a GI account; trades within the sipp won’t be subject to tax, if I’ve remembered correctly.