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What Are The Eligibility & Investment Limits Of SIPP


Who Can Apply For A SIPP

Nearly everyone under 75 in the UK is eligible to start a SIPP or transfer in another pension, even children.

To benefit from tax relief on contributions up to age 75, you need to be resident in the UK, or be a Crown Servant serving overseas, or their husband, wife or civil partner. You can also benefit, even if you have been non‐UK resident for up to 5 years, if you were resident when you started the SIPP. If you meet these basic requirements you can usually pay in at least £2,880 per tax year, which with basic‐rate tax‐relief is boosted to £3,600, whether you are a taxpayer or not. This means that children, retired people, and non‐working carers or parents can build up a pension pot.

Many people will be able to pay in more. Unlimited contributions are allowed, but tax relief will only be given on the higher of £3,600 or an amount up to 100% of "relevant UK earnings" where this is a personal contribution. Generally this is earnings from employment or self‐employment.

Each year there is an annual allowance on contributions; this tax year it is £50,000. Where the total contributions (personal, employer and the value of benefits being built up in final salary schemes) exceed the annual allowance you will normally be taxed on the excess. It is also possible that you could be affected by this if combined contributions over two consecutive tax years exceed one year’s annual allowance.

There is a new facility to potentially carry forward any unused annual allowance from the three previous years.

There is also a lifetime allowance. It is currently £1 million (2015 – 2016) and has just been reduced from £1.25 million (2014 – 2015), although it may be possible to protect yourself from this reduction. This applies to all your pension savings. If your total pension benefits taken exceed the lifetime allowance the excess could be hit with a lifetime allowance charge of up to 55%.

If you registered with HM Revenue & Customs before 6 April 2009 to protect your pension against the lifetime allowance then making any further pension contributions will normally lose any Enhanced Protection you hold.

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