Paying £2880 into pension when retired

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  • jamesd
    jamesd Posts: 26,103 Forumite
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    moneyfoolish wrote: »
    I'm not sure what this actually means. Does it mean that if we put in £2880 in 2016/17 tax year but don't take anything out in that year and then after we put in £2880 in 2017/18 tax year that when both these amount are updated to £3600 leaving £7200 in the pot that we can then draw out £1800 (25% of £7200) totally tax free and then take another payment tax free later in 2017/18 as long as that payment falls within my wife's tax free allowance?
    That's right.
  • TBC15
    TBC15 Posts: 1,452 Forumite
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    Jamesd

    Thanks for all the information we have picked up here.

    We have been contributing annual lump sums to my 61 year old non working wife’s SIPP with HL over the years. The investments are currently worth about £18000. What’s the best/ easiest/ cost effective way to draw the majority of the money out that would utilise her personal allowance this year.

    Monthly in/monthly out would appear to be the easiest way forward for 17/18 once she has started drawing from the SIPP.
  • jamesd
    jamesd Posts: 26,103 Forumite
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    Put it into income drawdown, taking a 25% tax free lump sum. Take a £10 taxable lump sum from the new drawdown account that will be created by HL for her. If she is fortunate the tax code from HMRC will be received by HL this tax year. Either way, nearer to the end of the tax year take out enough to use the rest of her personal allowance.

    If it turns out that the tax code doesn't arrive in time she can claim a refund using her online Personal Tax Account in the new year.
  • TBC15
    TBC15 Posts: 1,452 Forumite
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    Sound good. Could she still contribute into the same SIPP next year on a monthly basis?
  • MyOnlyPost
    MyOnlyPost Posts: 1,562 Forumite
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    Finally got my mum to do this today. Deposited £2,880 and tax relief due on 21st of April.

    Our Plan is to draw £2600 on March 31st so that when tax relief is added £1,000 is left in account as per HL rules. Is there anything we need to do between now and end of March? Does the money need to be put into drawdown before we can request a withdrawal for instance?
    It may sometimes seem like I can't spell, I can, I just can't type
  • jamesd
    jamesd Posts: 26,103 Forumite
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    TBC15 wrote: »
    Sound good. Could she still contribute into the same SIPP next year on a monthly basis?
    Yes, no problem.
  • Chrisv
    Chrisv Posts: 5,119 Forumite
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    jamesd wrote: »
    Yes, no problem.

    Hi James :) Still getting my head around this. I thought that if you put a sipp into drawdown, the original sipp is closed in favour of the Drawdown Sipp? It's not possible to pay into a drawdown sipp?
  • jamesd
    jamesd Posts: 26,103 Forumite
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    The original one can stay around if it is going to be used.
  • moneyfoolish
    moneyfoolish Posts: 681 Forumite
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    jamesd wrote: »
    You can only take a 25% tax free lump sum from the money actually in your pot at the time.
    Does that mean you can only take the 25% tax free lump sum the first time you withdraw any money and you can't take a 25% tax free lump sum in subsequent years even though you have added more money into the SIPP?
  • jamesd
    jamesd Posts: 26,103 Forumite
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    No. It means that once you have taken the initial tax free part the rest is moved into a drawdown account. You can't take another tax free lump sum from money in a drawdown account. You can from money in an account that isn't in drawdown and this is where newly paid in money goes.
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