Important - A SIPP is a type of pension for people happy to make their own investment decisions. Investments go down in value as well as up so you could get back less than you invest. The rules mentioned are those currently applying and could change in the future. You can normally only access the money from age 55 (57 from 2028). Tax reliefs depend on your circumstances. This website is not personal advice, if you are unsure an investment is right for you, please seek advice.
There are limits as to how much you can contribute to a SIPP. The general rule is if you're a UK resident under the age of 75, you can contribute to all your pensions (including a SIPP) as much as you earn, and receive tax relief each tax year.
A pension annual allowance (£40,000 for most people) and a lifetime allowance (£1 million) also apply.
SIPP contribution example:
If you earn £35,000:
- You should be able to contribute £35,000 gross to your SIPP
- The payment you make will be £28,000
- The taxman will automatically add basic-rate tax relief (20%) of £7,000
Higher and top-rate taxpayers can claim back even more through their tax return.
There are other factors that affect how much you can pay into your pension, detailed below, which you may need to consider, depending on your circumstances.
Find out more about pension tax relief
Other factors to consider
Simply click on any of the six scenarios that apply to you below to find out what else you need to consider when making contributions to your pension.
I'm a non-earner or earn less than £3,600
You can receive 20% tax relief even if you are a low or non-earner. Your pension contribution limit is £3,600 gross - a payment of £2,880 to which the taxman adds £720. This is the case even for people who don't pay tax, such as most children and non-earning spouses.
My 'adjusted income' is over £150,000
Your annual allowance could be lower than £40,000.
Broadly speaking, adjusted income is your total taxable income (including salary, dividends, rental income and savings interest) plus the value of any employer pension contributions.
For every £2 of adjusted income over £150,000, your annual allowance falls by £1. If your adjusted income is £210,000 or more, your annual allowance is £10,000. See the examples below.
There may be other factors to consider, please read our factsheet.
It might be possible to contribute more than the annual allowance by carrying forward unused allowance from the last three tax years – see below.
Download the annual allowance factsheet
I want to contribute over £40,000 this tax year
Some higher earners can contribute up to £170,000 by 'carrying forward' unused annual allowance from previous years. To be able to use carry forward, you must:
- Have unused annual allowance from any of the last three tax years (2013/14, 2014/15, 2015/16).
- Have been a member of a UK registered pension scheme (this does not include the State Pension) in each of the years from which you are carrying forward, even if you haven't contributed to it.
- Have earnings of at least the amount you are contributing. For instance, to make a contribution of £100,000 now, you must have earnings of at least £100,000 in the 2016/2017 tax year.
Discover more about carry forward
I'm a member of a defined benefit (final salary) pension
The benefits you are building up each year are assigned a monetary value.
This value counts towards the annual allowance and could therefore restrict what you can contribute to another pension. You need to contact your pension administrator and ask for this value.
I want to contribute more than I earn
In theory, your employer could contribute to your pension more than you earn (up to the current annual allowance, or more if using carry forward). An employer pension contribution is normally treated as an allowable business expense.
However, Her Majesty's Revenue and Customs (HMRC) could question it if the total salary and benefit package is excessive for the work undertaken. If you're unsure, contact your company's accountant.
For questions call our Helpdesk on 0117 980 9926 or email us, or to make an employer contribution:
Download an employer contribution form
I have already accessed my pension
If you have accessed a pension since 6 April 2015, or had flexible drawdown before, a reduced money purchase annual allowance may also apply. This is set at £10,000 for the 2016/17 tax year and the government has proposed it will be reduced to £4,000 from the 2017/18 tax year. You cannot use carry forward to increase the money purchase annual allowance. To find out when this allowance applies, download our Annual Allowance Factsheet.
Pension, contribution and tax rules are subject to change by the government. Tax reliefs referred to are those currently applying. Their value depends on your individual circumstances.
Pension tax relief calculator
Use our pension tax relief calculator to find out how much tax relief you could receive on your pension contribution.
The annual allowance (generally £40,000) is the maximum amount that can be contributed by anyone (yourself or your employer, for instance) into all your pensions in a tax year. Contributions above the annual allowance are taxed as income, unless you are able to carry forward unused annual allowance from the last three tax years. The annual allowance does not apply to any pension transfers.
Download the annual allowance and carry forward factsheet
The lifetime allowance (currently £1 million, and rising with CPI inflation from 2018) is the total value you can hold in pensions without incurring an additional tax charge. This is measured whenever you take benefits, reach age 75 or die, whichever is soonest.
Download the lifetime allowance factsheet