Personal contributions
You and/or your employer are entitled to contribute to any number of registered pension schemes. The issues to consider are whether the contribution will qualify for tax relief and the possibility of any tax charges that might apply now or in the future.

What can I reclaim tax on?
Generally speaking, anyone is entitled to contribute to a registered pension scheme, the only issue is whether or not they receive tax relief on the contributions.

If you are UK resident, you can contribute up to the higher of £3,600 or 100% of your relevant UK taxable earnings and receive tax relief on those contributions. However, where the total contributions paid (by you and/or your employer) exceed the annual allowance, there will normally be a tax charge up to 45% (up to 46% for Scottish taxpayers) depending on your taxable income and amount of excess pension savings.

Personal contributions made in excess of 100% of relevant UK taxable earnings do not receive tax relief and do not count towards your annual allowance.

If you are a non-UK resident individual, you are entitled to contribute but will not be entitled to any tax relief on contributions.

If you are currently non-resident but have been resident or had earnings chargeable to UK income tax in the last five years, you will be entitled to contribute but will only receive tax relief on contributions up to £3,600 gross (£2,880 net).

Your financial adviser will be able to give you specific information based on your personal situation.

Net or gross?
When a personal contribution is paid, we will need to know whether it is eligible for tax relief. If it is, the contribution is deemed to be net of basic rate tax - we will reclaim tax from HMRC and credit it to your SIPP account when it is received. Depending on your personal tax position, notably higher rate tax payers, you may be able to make a further tax reclaim through their annual self assessment return. If the contribution is not eligible for tax relief, it is gross and we will not reclaim tax from HMRC.

You should be aware that if a tax claim is made to HMRC to which it then transpires you are not eligible, they will require us to refund it to them. This may result in sufficient disinvestment of your SIPP funds to repay the tax. The contribution will then be deemed to have been paid gross.

Method of payment
You can arrange to pay contributions either on a regular or one-off basis. If you want to pay a regular contribution, you should complete a Direct Debit instruction. Single contributions can be made at anytime by cheque. You can use our contributions form but do not necessarily need to; all we need is:

  • a personal cheque drawn on an account in your name;
  • made payable to ‘Suffolk Life Trustees Limited re [your plan number]’ if you have a Suffolk Life MasterSIPP, SimSIPP or SmartSIPP  or 'Suffolk Life Annuities Limited re [your policy number]' if you have a Suffolk Life SIPP; and
  • a statement that it is a personal contribution and whether it is net or gross.

If you are unsure about the payee please contact your adviser or us.

Employer contributions
There is no limit on how much your employer can contribute to your SIPP. However, where the aggregate of all employer and personal relievable contributions in the tax year is over the annual allowance, there will generally be a tax charge to you personally on the excess.

For employer contributions to receive tax relief, they must be 'wholly and exclusively for the purposes of trade' as defined by Income and Corporation Taxes Act 1988. HMRC have issued guidance for employers to help define this, including pages in the online Pensions Tax Manual.