Change in the basic rate of tax: Member Contributions

A reminder that from 6th April 2008 you must take into account the lowering of the basic rate of tax to 20% (from 22%) when making personal tax relievable contributions to your SIPP.

All SIPP contributions should be made net of basic rate tax. We then claim back the basic rate tax due direct from HM Revenue & Customs (HMRC) and add this to your net contribution. This will then be the full gross contribution counting against your annual limit. You may then claim back direct any excess higher rate relief due.

As the basic rate has lowered, you will need to contribute slightly more to achieve the required gross contribution. For example, if after 5th April 2008 you wanted to contribute £1,000 to your SIPP you would now need to contribute £800 to your SIPP. We would then claim back £200 from HMRC and add this to your £800 net contribution. Before 6th April 2008 you only needed to contribute £780, as we would have claimed £220 back. If that £1,000 was within your higher rate tax margin this would not mean your overall tax relief due had reduced (as you could claim back personally £200, rather than £180, higher rate relief), but the spread between the relief claimed direct by your SIPP and yourself personally has changed.

To be tax relievable your contributions in a tax year must be within your 'relevant UK earnings' for that tax year. Our fact sheets 1 and 2 explain more. These can be downloaded from our website

Key Features of the PY SIPP

The Financial Services Authority (FSA) is the independent financial services regulator. It requires us, Pointon York SIPP Solutions Limited, to give you this important information to help you to decide whether the PY SIPP is right for you. You should read this document carefully so that you understand what you are buying, and then keep it safe for future reference. Click here for further information

Pointon York SIPP Solutions Limited (PYSS) has received the necessary variation of permission from FSA to establish, operate or wind-up a personal pension scheme from 6th April 2007 onwards. Our full permissions can be viewed (from 6th April 2007) from the FSA Register on the FSA website (www.fsa.gov.uk/register). Our FSA Authorisation number is 309975. PYSS is not authorised to give advice.