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How is the tax relief within SIPP Accounts calculated?

If you are paying the basic tax rate of 20%, every £100 you earn, the tax you pay is £20.
The tax relief process works in reverse: to accumulate £100 in your pension pot, you pay in £80 and the government will pay £20 in tax relief.

For people who pay the higher rate, the calculation is done in the same way: if you pay in £80 you will automatically accumulate £100 in your pension pot, plus you can claim another £20 via your self-assessment tax return which you can contribute to your pension or spend as you wish.

For more information on tax relief, visit the .Gov.uk website

Submitted on 17th May 2019

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The value of investments can fall as well as rise and any income from them is not guaranteed and you may get back less than you invested. Past performance is not a guide to future performance.

Selftrade does not provide investment advice. If you are in any doubt as to the risk or suitability of an investment or product you should seek advice from an independent financial adviser.

The extent and value of any ISA tax advantages or benefits will vary according to the individual's circumstances. The levels and bases of taxation may also change.

The extent and value of any SIPP tax advantages or benefits will vary according to the individual's circumstances. The levels and bases of taxation may also change. If your options change regarding an employer's pension scheme you may wish to review your financial situation. Once in a pension your money is only accessible, in general, from age 55.

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