End of tax year surge for SIPPs with deluge of top ups

There was a last-minute surge of activity from SIPP investors at the end of the tax year as they used the week after the Easter bank holiday to max their annual allowances. Late afternoon from 4pm to 5 pm on 5 April, was the busiest hour for Hargreaves Lansdown SIPP top ups with one top up every 11.3 seconds. In the very last hour before the tax year end at midnight, Hargreaves Lansdown saw a SIPP top up every 20 seconds. Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said many clients also made use of the ability to contribute up to £180,000 to a SIPP for the 2023/24 tax year through carry forward. She said: “It’s clear that people used the long Easter weekend to work out how much of their allowances they had left and started the new working week ready to use them. The 2023/24 tax year was the first where people could make use of the £60,000 annual allowance. This is the amount you can put into your pension and benefit from tax relief. A higher rate taxpayer would find their £60,000 pension contribution had only cost them £36,000. “For those who haven’t topped up their SIPP in recent years there was the potential to put in up to £180,000 through the use of carry forward. However, usage of these allowances is dependent on your annual earnings. For instance, your annual allowance is pegged at whichever is the lowest of your annual earnings and £60,000. "As tax year end approaches, people who may have variable income have a better idea of what their earnings are, so they can fund their SIPPs accordingly.” For the 2024/25 tax year the annual allowance sits at £60,000, and those who have previously flexibly accessed their pensions have an allowance of £10,000. Those who have not already made use of their annual allowance in recent years will also have the opportunity to contribute up to £180,000 through carry forward. This is where you can use unused allowances from the three previous tax years, as well as the current one. This puts the current maximum contribution at £200,000 for those able to take advantage of it. This tax year also sees the abolition of the lifetime allowance. Ms Morrissey said: “This new tax year also sees the abolition of the much-criticised lifetime allowance. This will bring further flexibility to people’s retirement planning - although the final rules are yet to be set in stone.”

End of tax year surge for SIPPs with deluge of top ups

Related items

News from Twitter