Can anyone help with a tax return question?

[Abigfeckingspider]

I am just completing my tax return for 2020 - 2021. I have UK and foreign income. I have worked out that I owe about £3000 to tax man. It is my understanding that I can put this into a SIPP and not have to pay tax. My question is did I actually have to pay that into the SIPP in the financial year of 2020-2021, or can I open one in the morning and pay in the £3000 to reduce my tax bill???

Put what into a SIPP?

My understanding is that you get tax relief on SIPP investments, so if I payed £3000 into the SIPP I would get tax reliefs on this

You need to have made the contributions during the tax year. Anything made now will be reflected in 2021/22.

Yes you can claim tax relief on pension contributions in some circumstances where there wasn’t already tax relief given or where you only had 20% relief but are eligible for relief at the 40% rate but you can’t make the pension contribution retrospectively for a previous tax year - you would have had to make the contribution within the relevant tax year. That’s bad luck.

The tax relief applies to the year the investment was made.

@somethingwittynotshitty

The tax relief applies to the year the investment was made.

Sorry, the previous posters put that better!

Thanks everyone, that’s a shame I wish I had known about it earlier. Anything else I could be doing as well?

If your tax bill is £3000 you'd need to put in much more than that to a pension to get an equivalent amount of tax relief.

@Abigfeckingspider

My understanding is that you get tax relief on SIPP investments, so if I payed £3000 into the SIPP I would get tax reliefs on this

You wouldn't get £3k tax relief on a pension contribution of £3k though - it'd be much less

I looked at reducing my tax bill (self employed) by paying into a private pension but it seemed that the pension company added the 20% tax relief on to the payment made so if you paid in £5000 then your pension payment would be uplifted to £6000 but it wouldn't make any difference to the tax payable. It would be different if you are in 40% tax bracket as I think you can then the other 20% on the tax return. Happy for someone to correct me if I have misunderstood that.

But you can add any payments made into your pension if you receive tax credits or working tax credits
Not sure about ucredit
And it will reduce your income accordingly.
Probably not applicable for you, but just in case anyone else is reading this

To get 3000 tax relief you would need to put £12000 into a pension fund during the relevant tax year