Does the IE SIPP have the option to make gross contributions? I.e. contributions that will not then be grossed up by 25% by HMRC.
If not, I’d like to request this feature. The SIPP is a good tax-wrapper, and with the recent changes in CG taxation (lower allowance, higher rates), investing in a SIPP vs a GIA can make more sense, even if those funds are not pensionable income. It would be great to be able to get these funds into the IE SIPP gross.
Yes, it’s simply the admin burden I’m trying to avoid. And you’re absolutely right, I can earn the interest. It’s even tax free interest, since the HMRC money goes into the pension, but I pay the rebate out of money in a GIA.
In any case it’s a very niche need, that will not be of use to the vast majority of users.
At present, we don’t have the ability to accept personal contributions that do not receive tax relief but, with some development, we could accommodate them. Please note though that pension income is taxable so your pension withdrawals (excluding tax free cash) will be subject to income tax. This is in effect double taxation as you wouldn’t have received tax relief on the funding contributions. Does that change your view?
I’m fully aware of the taxation rules regarding GIAs and SIPPs. It’s easy to come up with scenarios where a SIPP is better than a GIA, even for a gross investment, taking into account all taxation. So no, it doesn’t change my view.
That said, I do not hold a SIPP with IE, and won’t until you allow transfers from my current provider (not Vanguard), and my current provider does allow gross contributions. Also, this is a very niche need, and it is perfectly possible to pay the funds in to a SIPP net, and simply repay HMRC through self assessment.