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As a personal pension, a SIPP is eligible for tax relief
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The amount you contribute will reduce your tax liability
SIPPs and the self-employed
If you are self-employed or run your own company, it is down to you to plan for your retirement which is why a SIPP can offer advantages.
Less than a third of the self-employed contribute to a pension, which means they are missing out on valuable tax benefits. In fact, if you are your own boss, there are two ways a SIPP can be tax smart.
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Tax relief
As a personal pension, a SIPP is eligible for tax relief.
Open a SIPP and even if the amount you pay in varies month by month, the government will add an extra 20% in tax relief to your pension.
If you are a higher rate taxpayer, you can claim additional tax relief on your Self-Assessment tax return. How much you can claim will depend on how much you earn.
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Tax liability
As you run your own business, the amount you contribute will reduce your tax liability.
For sole traders and partnerships, what you pay in will be offset against your income tax liability.
If you are a director of a limited company, your business can make contributions into your SIPP and the amount is offset against corporation tax.
SIPP advantages
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Access
With an EQi SIPP you can invest one-off lump sums or make regular payments and enjoy access to a much wider range of investments.
As with all personal pensions, the government sets a maximum for contributions of £40,000 a year.
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Flexibility and control
If you are your own boss, you’ll be aware that you don’t have an employer paying into a pension. But as someone used to managing finances, a SIPP might offer the flexibility and control you will appreciate.
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Tax benefits
Less than a third of the self-employed contribute to a pension, which means they are missing out on valuable tax benefits.