If you are still in a position to use more of your annual pension allowance, it's not too late to secure tax relief of up to 40% this tax year by contributing to a pension such as our SIPP. But you must make your application by 5th April!
We believe a SIPP (self invested personal pension) is the best way to invest for your retirement and make use of this allowance so long as you are happy to make your own investment decisions and take responsibility for your pension yourself. We provide back-up, of course, with plenty of analysis and research upon which you can base your decisions.
If you want to secure your allowance but don't want to make an investment decision in today's uncertain economic climate you can still contribute to a SIPP but hold the money in cash at a fixed rate of 6% gross p.a. (6.09% AER) for three months and decide where to invest later. Interest within your SIPP accumulates tax free. Find out more about the Vantage High Interest Cash Option.
You'll still be eligible for the generous tax relief which means that if you write a cheque for £7,800 the government will top this up by £2,200 (the equivalent of basic rate tax) to make a total contribution of £10,000. If you are a higher rate taxpayer you can claim back up to a further 18% of the total contribution on your tax return. In this example - up to £1,800. £10,000 in your SIPP could therefore effectively cost you as little as £6,000 after tax relief. Your total tax relief will depend on your individual circumstances. Tax rules can be changed by the government.
Nearly everyone under age 75 is eligible to contribute to a pension. Even non-earners can put in up to £3,600 gross and gain tax relief of £792 - although if they don't use this year's allowance by contributing not later than 5 th April that too will be lost forever.
The deadline is particularly significant for higher rate taxpayers as it is their last chance to reduce their tax bill for this year by claiming against higher rate tax they have paid or are due to pay in this year.
It is important, too, for basic rate and non taxpayers who can claim 22% tax relief on their SIPP investments this year - a sum that will drop to 20% from 6 th April.
The great thing about a SIPP compared with traditional pensions is that if you are happy being in control it gives you the freedom to invest more or less where you like. The HL SIPP offers you the choice of more than 2,000 funds, individual shares, exchange traded funds, investments trusts, gilts, bonds and cash. See here for our latest investment ideas.
