How much can I contribute to a SIPP?
SIPP Contribution Limits
Many SIPP providers will now permit you to set up a lump sum transfer contribution from another pension for as little as £5,000, and while most traditional pensions limit investment choice to a short list of funds, normally run by the pension company's own fund managers, a SIPP enables you to follow a more diverse investment approach.
Most people under 75 are eligible to contribute as much as they earn to pensions including a SIPP (effectively capped at £255,000 each tax year). For instance if you earn £50,000 a year you can contribute up to £50,000 gross (£40,000 net) into all your pension plans combined in the 2010/11 tax year.
If your total annual income has reached £130,000 since April 2008, you may experience further restrictions on the amount you can contribute and obtain higher or additional rate tax relief.
The earnings on which you can base your contribution are known as Relevant UK Earnings. If you are employed this would generally be your salary plus any taxable benefits. If you are self employed, this would normally be the profit you make (after any adjustments) for UK tax purposes.
Even if you have no Relevant UK Earnings, you can still contribute up to £3,600 each year to pensions. Of this the government will pay £720 in tax relief reducing the amount you pay to just £2,880.
Speak to the independent pension advice team from one our partner firms over which SIPP to invest in or more information on the benifits of investing in a SIPP.
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