What tax relief is available on contributions to the Vantage SIPP?
- As an incentive to save for your retirement, when you make a pension contribution, you receive tax relief of up to the highest rate of tax you pay. How much depends on your circumstances.
- Your contributions automatically receive 20% basic rate tax relief. This means the government in effect pays 20%. For example, to make a £10,000 SIPP contribution, you pay £8,000 and £2,000 tax relief is automatically added. We reclaim the basic rate tax relief and credit it to your account 6 to 11 weeks later.
- If you pay tax at 40% you can claim back up to a further 20%, reducing the effective cost of a £10,000 contribution to as little as £6,000. 50% rate taxpayers can claim back up to 30%, reducing the effective cost to as little as £5,000. You must pay sufficient tax at the higher rates to claim the full tax relief.
- The extra tax relief can be reclaimed via a tax return or by contacting your local tax office. It is not automatically added to your SIPP, but is accounted for by a reduction in the amount of tax you pay. If you wish, you can use the extra tax relief to make a contribution to your SIPP, however, this will be classified as a new pension contribution so please ensure you remain within your contribution limits.
- Even if you have no earnings you can still benefit from tax relief – you can pay up to £3,600 in total to pensions each tax year, of which the government will automatically pay up to £720.
- Since April 2010, everyone treated as having income of more than £100,000 has seen a reduction in their tax-free personal allowance. Making a pension contribution can have the effect of reinstating this, resulting in tax relief of up to 60% for a few people. See SIPP tax benefits for more details.
- Whilst these are the current rules, all tax rules may change in the future.
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Before applying, please understand the risks and features of the Vantage SIPP.