Pension Contribution Funding

Funding a Self-Invested Personal Pension (SIPP) requires adherence to strict His Majesty’s Revenue and Customs (HMRC) and platform-specific rules regarding the source of funds to ensure a payment can be classed as tax relievable contribution to a pension scheme.

To contribute to the Hubwise SIPP the cash must typically originate from a bank account held in either the members name or their employer's name.

Personal Contributions:

If a member is looking to make a personal contribution the payment can be funded in the following ways:

• Personal Bank Accounts: Members can make personal contributions from their own bank or building society account via Direct Debit, Faster Payments, or Standing Orders.

  
  

  These payments will be classed as net contributions; for every £80 they pay, we will claim £20 back from HMRC (20% basic rate relief) to make a £100 gross contribution.

  
  

• General Investment Account (GIA) To SIPP

  The GIA is a trading account, which can be used to fund a pension via a cash transfer, in-specie payments are not permitted.

  
  

  Moving cash from a GIA to a SIPP is still viewed as a personal contribution. 

  
  

  The member will receive 20% basic rate tax relief on the amount moved, as with all other pension contributions the member must have sufficient relevant UK earnings to cover the full contribution including the grossed-up value of the contribution.

  
  

The member may not make a personal contribution via a direct payment from an ISA which is held off platform or from an ISA which is part of the platform as an ISA and a SIPP face different tax regulations.

Because ISAs and SIPPs have different tax treatments, any move from an ISA to a SIPP must be treated as a withdrawal followed by a new contribution, as such the payment from the ISA will be made to the members nominated bank account from which the personal contribution will be paid.

If this is required please ensure that there is time to make both parts of the transaction if the requests are being made towards the end of the tax year, details of deadlines will be published each year for you to provide the appropriate advice to the member.

Employer Contributions

As mentioned, employers may also make contributions to the scheme and these will be funded as follows:

• Employer Bank Accounts: If the members employer is contributing, the funds must come directly from the employer’s business bank account. If the member is Self Employed please see the article on knowledge base as there are variations on how these would be paid to the scheme (Self Employed Contributions)

  
  

  
  Employer contributions are paid gross (no tax relief will be claimed by SS&C), as they are treated as an allowable business expense to reduce Corporation Tax.

If you have any questions on these policies please contact us via a Freshdesk ticket.