whether SIPP contribution will be exempted from income tax

I am a basic tax payer. I wish to know whether the amount of income which contribute to the SIPP account will be exempted from income tax? (i.e. when calculating income tax, will the part contributed into SIPP be excluded as income which of calculating the income tax?) Thanks.

Hi
If your self invested pension provider claims tax relief from HMRC, for the payments you make into your pension scheme, then as a basic rate taxpayer, you will receive all of the tax relief available.  Where your income takes you into the higher rate or additionla rate tax brackets, then you either claim higher rate / additional rate tax relief through a self assessment tax return or by submitting a claim in writing, that includes supporting evidence.

Thanks for your reply. Understand the tax relief will be pay into my SIPP account. My questions is, whether the amount of income which I contribute to the SIPP account can be deducted from the income which I fill in the self assessment tax form? Thanks.

Hi, I'm not a HMRC Admin but contributions to a relief at source pension do not reduce your taxable income, they increase your basic rate band. This is because the pension provider will claim the basic rate tax relief and pay it into your pension. So if you wanted to contribute 10k to a pension, you would pay 8k from your take home pay and pension would add 2k, bringing the total contribution to 10k. In order to get 8k take home, you'd have to have earned 10k and paid 20% (2k) in tax. So that 2k you paid isn't lost, it is paid into the pension. If your scheme was deducted before tax, you'd have to pay 10k gross into the scheme (and had you not paid it in to pension, you would've received 8k into take home). So hopefully that helps explain that even if you do include them on the self assessment, it will not affect your tax liability if you are a basic rate payer.

Hi YY WONG,
No, you still show the full income earned but also declare the SIPP contribtion as pension payments.
Thank you.