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Know your limits

You can pay as much as you like into your SIPP Account each tax year but you can only get tax relief on payments up to the greater of:

  • all of your relevant UK earnings in the tax year (subject to your annual allowance, explained below); or
  • up to £3,600 (before tax) regardless of any earnings. This means you pay £2,880 and we reclaim basic rate tax relief from HMRC which tops up your payment to £3,600.

It can take up to 8 weeks for us to get your tax relief from HMRC. And if you are a higher rate tax payer you’ll have to claim any higher rate tax relief through your self-assessment tax return.

These rules apply to other personal pension schemes and not just SIPPs.

Tax relief find out more

Important information

Please remember the value of your investments and any income from them can go down as well as up. The value of your fund may be less than you paid in.

Before you choose a SIPP, make sure you understand its aims and risks. Alliance Trust Savings does not give advice. A SIPP requires active management and investment expertise. You should make sure you review your investments regularly.You will not normally be able to access your pension to provide you with benefits until you are at least age 55.

Laws and tax rules may change in the future without notice. The information here is our understanding in April 2018. This information takes no account of your personal circumstances which may have an impact on tax treatment.


Your annual allowance

Each tax year there is an annual allowance for the total that you, your employer and anyone else making payments on your behalf can together pay in or build up across all registered pension schemes in your name. This limits the personal payments on which you can actually claim tax relief.

The annual allowance is currently £40,000 or 100% of earnings (whatever is lower) (unless you are already taking money out from a pension, when it usually goes down to £4,000).

You will have to pay a tax charge on anything above your annual allowance, unless you can use up (‘carry forward’) any left-over annual allowance from up to the three previous tax years.

Tapered annual allowance

if you have earnings of more than £150,000 in a tax year then your annual allowance for that tax year is restricted.

For every £2 of income that exceeds £150,000, £1 of annual allowance will be lost. The maximum reduction is £30,000. It will be reached if you have earnings of at least £210,000 in the tax year, resulting in an annual allowance for you of £10,000.

The tapered annual allowance is applied each tax year separately, so you may have a tapered annual allowance in one tax year and a full annual allowance in the next tax year depending on your earnings.

Find out more

Your lifetime allowance

There is a lifetime allowance for all your pension savings. The lifetime allowance for 2018/2019 is £1.03 million.

You might have to pay a lifetime allowance charge of up to 55% on anything you take out from any registered pension scheme above your lifetime allowance.

In recent years the lifetime allowance has been reduced. If you applied for protection from these changes you may have a lifetime allowance higher than £1.03 million.

Find out more

How much could your SIPP be worth?

Use our savings tool to work out how much you might be able to save for retirement.
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Alliance Trust Savings Limited is a subsidiary of Alliance Trust PLC and is registered in Scotland No. SC 98767, registered office, PO Box 164, 8 West Marketgait, Dundee DD1 9YP; is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, firm reference number 116115. Alliance Trust Savings gives no financial or investment advice.