PTP's Tax Tip No 15 - Pensions ' Too good to be true?

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Q - My client has found herself in the enviable position of being rather flush with cash, due to a large bonus which may be repeated next year. Her earnings are just over 500,000 all told and she would like to maximise her contributions into a new SIPP. Am I right in thinking that she can invest more than 215,000 and get tax relief?

A ' Yes she can. If her SIPP has a pension input period ending on (say) 30 June, then a contribution equal to the annual allowance of 215,000 gross (167,700 net) can be made before 30 June 2006 for relief in 2006-07. A further 225,000 gross (175,500 net) can be invested shortly after that date and will also qualify for relief in 2006-07. The tax relief is given in the tax year in which the contributions are paid, provided the individual has sufficient earnings t...

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