The MSE Forum will be undergoing some maintenance this evening. As a result, some users may experience temporary performance issues. Please use the Site Feedback board to report anything major. Thank you for your patience.

Paying £2880 into pension when retired

12627293132136

Comments

  • moneyfoolish
    moneyfoolish Posts: 681
    First Anniversary Name Dropper First Post
    Forumite
    edited 21 March 2017 at 9:28AM
    meantime wrote: »
    Would there still be time to do this and withdraw the contribution, if not the top up, in the current tax year? I'm expecting the answer to be either "no" or "depends which provider you choose".
    We recently set up a SIPP for my wife with HL and the top up will be paid on April 21st next year. I telephoned them to talk about drawdown and they implied that once the drawdown request was sent to them with the 25% tax free sum requested that it would be paid quickly but based on the £2880 before the top up had been added. They told me that if my wife wanted to wait until the top up was paid on April 21st then she should add a note to that effect with the drawdown request. We then decided that she would take the 25% from the initial £2880 so it would be paid in this tax year but a couple of days ago my wife received a secure email confirming HL had received the drawdown request and the 25% tax free lump sum request but the email said that it would be paid and the remainder moved into drawdown once the top up had been added after April 21st. I don't know if this is always the procedure or whether it is being done because of the conversation I had with HL even though my wife didn't send the note they mentioned to hold the payment until after the top up had been added. In my wife's case, it isn't important so we don't really care either way but it may be important to others.
  • missile
    missile Posts: 11,684
    Name Dropper Photogenic First Post Combo Breaker
    Forumite
    Yes, the transfer + 25% tax free is available after the top up is received from HMRC, unless you instruct HL otherwise..

    Please note,

    * There is no tax liability on the 25% tax free and thus it makes no difference in you take it now or after 05th April.

    * You are too late to give an instruction to HL for a payment to be made this tax year.

    * If your funds are already in a SIPP drawdown account, you could still withdraw via a BACS transfer before 05th April.
    "A nation's greatness is measured by how it treats its weakest members." ~ Mahatma Gandhi
    Ride hard or stay home :iloveyou:
  • missile
    missile Posts: 11,684
    Name Dropper Photogenic First Post Combo Breaker
    Forumite
    Please note; instructions and funds withdrawn via BACS transfer will not be paid during this tax year. Instructions before 17th of each month should be paid no later than 28th.
    "A nation's greatness is measured by how it treats its weakest members." ~ Mahatma Gandhi
    Ride hard or stay home :iloveyou:
  • jerrysimon
    jerrysimon Posts: 343
    First Anniversary Combo Breaker First Post Hung up my suit!
    Forumite
    edited 21 March 2017 at 2:28PM
    I should have around 12K in my wife's SIPP (H&L) which I have been running the last 18 months held as cash. This was to maximise her final couple of years part time salary (she did not pay tax) and now she has reduced to 4 hours a week only earns around £180/month. She is now 55.

    As I have no plans to invest it in the SIPP I am wondering how it is best to draw it out after the end of the tax year. I quite like the option of maintaining a SIPP with the £2880 allowance going forward. Presumably I can start by withdrawing the 25% then so much a month to empty it out or take it all out at once (leaving the min so as not to close it) as long as I dont go over her tax allowance ?

    I assume as long as I don't empty it I can continue to pay in the £240/month to keep it going or would I need to set up a new SIPP for her ?

    PS my last day at work is this Friday, having decided to retire early :)

    I will be drawing my DB pension early but we are leaving my wifes small school pension hopefully until her 60th birthday or at least until she gives up work completly.

    Regards

    Jerry
  • missile
    missile Posts: 11,684
    Name Dropper Photogenic First Post Combo Breaker
    Forumite
    jerrysimon wrote: »
    I should have around 12K in my wife's SIPP (H&L) which I have been running the last 18 months held as cash.
    Please be advised:
    1.You deposit into a SIPP account up to your annual allowance.
    2. Funds can be invested or held as cash.
    3. You can transfer all or some of the SIPP funds to a SIPP Drawdown account.
    4. You can withdraw 25% tax free
    5. You can drawdown as much or as little as you wish. Tax will be deducted per your tax code.
    6. You may find it convenient to take 25% tax free and the balance as a monthly "pension" over 12 months.
    7. The "pension" will be tax free unless you exceed your personal allowance.

    Enjoy your retirement :beer:
    "A nation's greatness is measured by how it treats its weakest members." ~ Mahatma Gandhi
    Ride hard or stay home :iloveyou:
  • jerrysimon
    jerrysimon Posts: 343
    First Anniversary Combo Breaker First Post Hung up my suit!
    Forumite
    missile wrote: »
    3. You can transfer all or some of the SIPP funds to a SIPP Drawdown account.
    4. You can withdraw 25% tax free
    5. You can drawdown as much or as little as you wish. Tax will be deducted per your tax code.
    6. You may find it convenient to take 25% tax free and the balance as a monthly "pension" over 12 months.
    7. The "pension" will be tax free unless you exceed your personal allowance.

    Enjoy your retirement :beer:
    Thanks. Its been quite a journey as I have planned it over the last 12 months. Spring is a great time to retire.

    That answers it I will transfer it for draw down leaving some in to top up with the allowance. As my wife only earns just over 2K per year now I will ensure I dont take out more (after the 25% tax feee) that takes her over her allowance.

    Regards

    Jerry
  • meantime
    meantime Posts: 59 Forumite
    missile wrote: »
    * You are too late to give an instruction to HL for a payment to be made this tax year.

    Does anyone know if it's still possible with any other provider?
  • Nationwide8
    Nationwide8 Posts: 362
    Hung up my suit!
    Forumite
    My SIPP was topped up with £720 on 21st March :) the exact day HL said it would be.

    So from another thread it dosent seem as simple of pressing a few buttons on line to draw money out in this tax year ???
    Hoping to ring HL on Saturday to draw out 25% tax free £900 and then a lump sum of over £1000 to maximise my UNused amount left in my PA "pot" for 2016 -2017.
    I know I will be taxed initially on anything over 25% withdrawn ( it will be first withdrawal as regards HMRC tax code etc ) but should there be any problem drawing out in a lump sum anything above 25% ???
    Am also assuming even if you draw out say 50% in one go only 25% would be taxed ??
  • Nationwide8
    Nationwide8 Posts: 362
    Hung up my suit!
    Forumite
    missile wrote: »
    Please note; instructions and funds withdrawn via BACS transfer will not be paid during this tax year. Instructions before 17th of each month should be paid no later than 28th.

    So....just to clarify,'re my post above,if I request a withdrawal of anything above my 25% tax free amount from today onwards it will not be paid in tax year 16-17 ????
    Thanks.
  • * You are too late to give an instruction to HL for a payment to be made this tax year.
    Originally posted by missile


    Quick question - if possible please could someone confirm does this mean it is too late to open a new SIPP for 2016/17 with HL? Thanks in advance.
Meet your Ambassadors

Categories

  • All Categories
  • 342.4K Banking & Borrowing
  • 249.9K Reduce Debt & Boost Income
  • 449.4K Spending & Discounts
  • 234.6K Work, Benefits & Business
  • 607K Mortgages, Homes & Bills
  • 172.8K Life & Family
  • 247.4K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.8K Discuss & Feedback
  • 15.1K Coronavirus Support Boards