New to SIPP, some questions

[win10]

Hi all,

I am new to SIPP and have never had any kind of pension set up.
I did some reading and check the right pane but couldn't find anything about SIPP here.

I have > £40k in my LTD now and I was wondering if it is a good idea to open a SIPP now.

Some questions:

1. the SIPP is opened in my own name, right? Nothing to do with my LTD.
2. My LTD's TY ends this month so I will have to open SIPP and pay in now to use the £40k allowance? Any other way to utilise this year's allowance? I know you can pay for 3 years back if the SIPP was opened then, but how do you reconcile this with closed (and corp. tax paid) LTD FYs?
3. I am on £732/month. Can I transfer £40k still?
4. Any SIPP fund recommendations?

Thanks in advance.

[syrio]

1. Yes, open the SIPP in your own name.

2. Best to pay in the £40k now if you can. Otherwise I don't really know.

3. Yes, you can transfer £40k to your SIPP assuming you have no other personal pension contributions. It must be a payment from your company, not a personal payment.

4. I'd go with a vanguard low cost global index tracker fund or ETF, e.g. VWRL.

Read the pinned sticky thread on this.

[radish2008]

1. Yes, open the SIPP in your own name.

3. Yes, you can transfer £40k to your SIPP assuming you have no other personal pension contributions. It must be a payment from your company, not a personal payment.

Read the pinned sticky thread on this.

Vanguard are great but make sure you have a debit card on your business account as they only accept debit card payments from a business account. You can also make personal payments, not from your business though, an obviously the tax is treated differently.

[Lance]

the £40k allowance is a personal allowance. Nothing to do with the company.

The only reason to pay before company YE is to reduce CT bill.
You can pay £40k today, and £40k on 6th April.

If you miss the deadline this month you can pay £80k in the same company year, and reduce your CT bill for 20/21 by £15,200.

[eek]

the £40k allowance is a personal allowance. Nothing to do with the company.

The only reason to pay before company YE is to reduce CT bill.
You can pay £40k today (for 2020/21), and £40k on 6th April (for 2021/22).

If you miss the deadline this month you can pay £80k in the same company year, and reduce your CT bill for 20/21 by £15,200.

Just making it clear as I was about to say you use your previous years allowances if they haven't been previously set up and then noticed that you had set the date to 6th April.

For anyone reading this - even if you aren't planning to use a pension this year, take some time and set one up even if you only but £100 in - it will be useful if you ever end up in an inside IR35 contract and wish to throw more money in.

[NowPermOutsideUK]

SIPP tax relief is not available to anyone who is not UK tax resident - I checked this
Also BTL rental income is not income for SIPP tax relief purposes

Two short questions:
1) Can you pay 40K even if your salary was only 397 a month as the OP mentioned? I thought you had to earn 40K for you to get tax relief on that.
2) Is there a limit on how much the company pays into your SIPP? Can the OP claim a 10K annual salary and a 100K pension from the company? I know this is extreme which is why I asked

[Paralytic]

Two short questions:
1) Can you pay 40K even if your salary was only 397 a month as the OP mentioned? I thought you had to earn 40K for you to get tax relief on that.
2) Is there a limit on how much the company pays into your SIPP? Can the OP claim a 10K annual salary and a 100K pension from the company? I know this is extreme which is why I asked

A google search will tell you the above in more detail that I can be bothered to do here here, but:

1) You can't personally pay in more than your salary for tax relief purposes, but your employer can

2) There is no company limit per se (the £40K is not an actual limit, just an annual cumulative cut-off for personal tax relief) but you are bound by the normal rules that all remuneration to a director/employee must be justifiable within the role that person performs for the company. This is where accountants can advise.

[northernladuk]

If he used Google to find stuff out he wouldn't be able to troll the forums.

[win10]

Thanks for the input.
So I set up my personal SIPP and transfer up to £40k from the company to it. Ideally before end of LTD's TY (Nov 2020)to save on corp tax. Is that it in brief?
Is there any point to paying £40k more from personal savings on 6 Apr 21 (new personal tax year)? Will this result in returning of personal tax? Although on 8k/y I didnt pay any.

Other question: wife is a employee (contract and all, £8k/y) of LTD. Can she have £40k put in her SIPP as well or this is only for directors?

[cwah]

I think (but not sure) that you can only pay into your SIPP from profit.

So if your £40k is from retained earnings, then you may not be able to pay as you'd declare loss in that case.