Capital Adequacy
Hartley Pensions Limited are in full compliance with the latest FCA capital adequacy rules that came into force affecting SIPP providers.
How it affects you ...Receiving tax relief on your pension contributions is a valuable advantage over other saving vehicles. It is important that you claim the right tax relief and be aware of limits and potential penalties. If you are unsure prior to making a contributions please seek advice from a suitably qualified adviser but below we have provided generic information on pension tax relief.
What is the percentage of tax relief claimed?
Hartley Pensions complies with the HMRC relief at source tax reclaim model. This means that we will reclaim basic rate tax (20%) on Net Contributions.
I am a Higher Rate tax payer, who claims the extra tax relief?
Higher rate tax payers and additional rate tax payers can claim any further relief due on their Self Assessment form. If you have any questions regarding eligibility for further relief or completing their Self Assessment form the client needs to contact HMRC on 0300 200 3310.
Contribution Examples
A client earns a Gross Salary of £20,000.
The maximum Net contribution that will receive tax relief on is £16,000. Tax Relief of £4,000 will be claimed.
This can be calculated by £20,000 x 80% = £16,000.
What happens if a client contributes more than their relevant earnings?
The contribution will be spilt between a Net Contribution and Gross Contribution.
For example
Client earns a Gross Salary of £20,000 and wants to make a £30,000 contribution. The maximum amount that will receive tax relief is £16,000.
This will be recorded as:
£16,000 Net Contribution (Tax relief claimed £4,000)
£14,000 Gross Contribution
Employer Contributions
Contributions can be made into the members SIPP by their employer. Employer contributions are not restricted by the employee’s relevant UK earnings. Employer contributions are paid gross and corporation tax relief is granted via the company accounts.
Third Party Contributions
The payment of contributions is not limited to the member or employer; other people can also make contributions on the individual’s behalf. These contributions are treated as if they are paid by the individual (SIPP Member) with the limits that apply to individual contributions. So tax relief is restricted to the higher of £3,600 or 100% of the member’s relevant UK earnings.
Annual Allowance
If you contribute more than the Annual Allowance (currently £40,000) you may face a tax charge. Please see our technical section for more information on Annual Allowance.
Tax on Investment returns
Investments held within your pension will receive tax efficient growth. Your investments within the pension will be free of Capital Gains Tax and Income Tax. This includes dividends, interest and rental payments.
