Wealthtime SPP Contributions. Questions and Answers.

SIPP Contributions.

Please note that the Wealthtime SIPP is not a qualifying scheme for auto-enrolment nor are we able to offer any facilities for administering group schemes.

Who can contribute to the Wealthtime SIPP?

Anyone may join and contribute to the Wealthtime SIPP and provided they are under 75 they will normally obtain tax relief on such contributions. There are three categories of membership and the one that applies to you will determine how much tax relief you will be able to receive on your contributions:

  • UK resident individual or have relevant UK earnings subject to UK tax
  • Non UK resident individual, who was a UK resident individual when the SIPP was set up, and at some time in the last five tax years had been resident in the UK
  • Non UK resident individual.

IMPORTANT: If you have Enhanced Protection or Fixed Protection any contribution made to this SIPP means you will lose this Protection. You should speak to your Financial Adviser.

What if I am a UK resident individual or have relevant UK earnings subject to UK Tax?

If you are a UK resident or have relevant UK earnings subject to UK tax you will be entitled to tax relief on the higher of:

  • £3,600 gross, or
  • 100% of relevant UK earnings (up to the Annual Allowance).

This means if you do not have any earnings you can contribute £2,880 net and receive basic rate tax relief on this amount.

What if I am a non UK resident individual, who was a UK resident individual when the SIPP was set up, and at some time in the last five tax years had been a resident in the UK?

If this category applies, you will receive:

  • Tax relief on your contributions up to £3,600 gross. However if you contribute over £2,880 net or £3,600 gross, you will not receive any tax relief on the contribution in excess of this amount.

What if I am a non UK resident individual?

You can contribute any amount but you will not be entitled to receive any tax relief on your contributions.

How much can I contribute to the Wealthtime SIPP?

HM Revenue & Customs only allows tax relievable contributions up to a certain level each tax year. This is known as the annual allowance.

The annual allowance for recent tax years is:

2017/18 £40,000
2016/17 £40,000
2015/16 £40,000
2014/15 £40,000

which will be subject to tax relief at your highest marginal rate. In addition, from April 2011, any unused allowance in one year can be carried forward for up to 3 consecutive years before entitlement to relief for that year is lost up to a limit of £40,000 each year, provided that you were a member of a pension scheme during the year used for carry forward. A Tapered Annual Allowance may apply if your income exceeds £150,000 p.a.

If you make a contribution which exceeds the annual allowance, a tax charge (the Annual Allowance Charge) will be levied on you by HM Revenue and Customs on the excess unless you are able to justify this by carry forward relief from previous years.

The annual allowance does not apply and no tax charge will be levied on contributions in the year you die. If this applies, full tax relief can be obtained on contributions subject to the normal limit of 100% of relevant UK earnings.

Wealthtime will in accordance with HM Revenue and Customs requirements issue you with a Pension Savings Statement showing your contributions during the year if you have exceeded the Annual Allowance and you will need to declare this on your self-assessment tax return.

From April 2015 if you are:
(a) not drawing benefits, the Annual Allowance continues at £40,000 p.a.
(b) in Capped Drawdown, the Annual Allowance continues at £40,000 p.a.
(c) in Flexi-Access Drawdown, you will be able to continue to make contributions but the amount will be reduced to the Money Purchase Annual Allowance (MPAA) from the time the Flexi-Access Drawdown commences. Complex rules apply to contributions made before the MPAA is triggered and after. Above that figure the Annual Allowance Charge will apply. However, if you only take your Pension Commencement Lump Sum and not any accompanying pension the MPAA is not triggered.

The MPAA only applies to contributions to money purchase schemes. You will still be entitled to contribute up to the balance of £40,000 into a defined benefit ("final salary") scheme of which you are a member. Carry forward is available on such contributions but not on the MPAA.

Can I be a member of my employer’s pension scheme and also open a SIPP?

If you are a member of your employer’s pension scheme you can also have a SIPP and there are no restrictions on contributing to both pension schemes at the same time, but you only have one annual allowance covering all your pension schemes.

Which contributions count towards the annual allowance?

Your own or your employer contributions to money purchase arrangements count, and if you are a member of a defined benefits scheme the amount of any increase in the value of your rights under that scheme, whether arising from a contribution or not, will count towards your annual allowance. You can obtain this information from the administrator of that scheme. Transfer values, national insurance rebates for contracted out schemes and pension credits and debits from a divorce settlement do not count.

Do you need evidence of earnings?

Wealthtime does not need to collect evidence of your earnings to support any contribution you make.

Can I carry forward unused relief?

Yes, for up to 3 years provided you are a member of a pension scheme during each of those years you use for carry forward. The carry forward provisions are complex and you should consult your financial adviser but basically you can carry forward up to £40,000 from each of the previous three years less any contributions you have made during those years, starting with the earliest year, providing you have been a member of a pension scheme during those three years.We are required to inform you if we believe you have contributed in excess of this amount and if so, you and your SIPP will be liable for a tax on the excess known as an Annual Allowance Charge which is currently levied at your marginal rate of tax on the excess. As previously explained, there is no carry forward facility in respect of the MPAA. A Tapered Annual Allowance may apply if your income exceeds £150,000 p.a.

What frequency of contributions can I make?

Contributions may be made in the following ways:

  • Single contributions which may be paid at any time
  • Regular contributions which may be paid annually, half yearly, quarterly or monthly.

What happens if I make excessive contributions?

You are responsible for notifying HM Revenue & Customs of the amount of contributions you have paid to your pension schemes through your self-assessment tax return. HM Revenue & Customs will then notify Wealthtime if you have paid a contribution in excess of £3,600 or 100% of your relevant UK earnings, subject to the annual allowance, (and carry forward if applicable) whichever is higher, on which we will have reclaimed basic rate income tax relief. Any excess contributions can be repaid to you from the SIPP once the tax relief on the excess contributions has been recovered from the SIPP and repaid to HM Revenue & Customs by Wealthtime. You can request that any excess contribution remains within the SIPP, but Wealthtime will maintain a separate record showing that the excess contribution is not entitled to receive tax relief. As previously referred to, any contribution which is also in excess of the Annual Allowance is subject to an additional tax charge.

Can my employer make contributions?

Your employer may contribute to your Plan and may do so even if you are making no contributions yourself. Any employer contributions to the SIPP will normally be paid gross. Any regular contributions must be expressed as a fixed monetary amount not as a percentage of remuneration.

For annual allowance purposes, any contributions paid by your employer will be added to your own when determining if the allowance has been exceeded.

What is the tax relief on contributions?

Basic rate relief on contributions - If you are eligible to make your own contributions to the SIPP these are treated as having been paid net of basic rate tax; for example, you wish to pay a gross contribution of £1000, you will actually pay only £800 (assuming a basic rate of tax at 20%). Wealthtime will reclaim an amount equivalent to basic rate tax from HM Revenue & Customs on your behalf and apply it to your fund. The tax reclaim will take between 7-11 weeks. Please note that the value of the reclaim can only be invested once it has been paid into your Designated SIPP Bank Account and it has cleared.

Higher rate relief on contributions - If you pay higher rate tax you will be eligible to claim higher rate tax relief, which can be claimed via your annual self assessment tax return. This amount is paid to you and is not added to your fund.

If your employer makes contributions, they will normally pay them gross so no monies will be reclaimable from H M Revenue and Customs. There is no tax relief on transfers from other pension funds into your Plan. Remember that the rules on tax relief depend on individual circumstances and may change in the future without prior warning.

What is the Pension Input Period?

The Pension Input Period runs from the date the first contribution is paid. The Pension Input Period end date is 5th April in the tax year the first contribution is paid. Subsequently the Pension Input Period is the tax year.

The Wealthtime Private Client Service is administered by Wealthtime Limited, which is authorised and regulated by the Financial Conduct Authority.
Wealthtime recommends that before making a decision regarding this service and the investments you should contact your Financial Adviser.

Wealthtime Limited, The Oak House, Barford Lane, Downton, Salisbury, Wiltshire SP5 3QA T: 01725 512925 E: admin@wealthtime.co.uk

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