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  • FIRST POST
    • nxdmsandkaskdjaqd
    • By nxdmsandkaskdjaqd 3rd Jan 17, 8:39 AM
    • 474Posts
    • 45Thanks
    nxdmsandkaskdjaqd
    Paying 2880 into pension when retired
    • #1
    • 3rd Jan 17, 8:39 AM
    Paying 2880 into pension when retired 3rd Jan 17 at 8:39 AM
    Jamesd wrote in another thread the following:
    "She can make 720 a year tax free by paying 2880 net into a pension, having it grossed up to 3600 then withdrawing it. Can only do the withdrawing part from age 55. Can only pay in for this until age 75."

    I have just retired at 60 and have transferred my DC pension to a new SIPP. I plan to live off savings till state pension kicks in.

    I am correct that the above approach should be part of my strategy of being tax efficient?
    Last edited by nxdmsandkaskdjaqd; 03-01-2017 at 10:14 AM.
Page 23
    • Lily1
    • By Lily1 14th Nov 17, 10:51 PM
    • 168 Posts
    • 61 Thanks
    Lily1
    Another question, if I sent up a small monthly direct debit ( to help in my search for more dds after the Tesco change next April ). Could I then put the remainder in towards the end of the financial year by debit card?
    • mjfp509
    • By mjfp509 15th Nov 17, 9:21 AM
    • 141 Posts
    • 40 Thanks
    mjfp509
    Another question, if I sent up a small monthly direct debit ( to help in my search for more dds after the Tesco change next April ). Could I then put the remainder in towards the end of the financial year by debit card?
    Originally posted by Lily1
    yes, you can do that..
    • clivep
    • By clivep 15th Nov 17, 12:31 PM
    • 182 Posts
    • 67 Thanks
    clivep
    Another question, if I sent up a small monthly direct debit ( to help in my search for more dds after the Tesco change next April ). Could I then put the remainder in towards the end of the financial year by debit card?
    Originally posted by Lily1
    There may be a monthly minimum for the DD.

    We have Fidelity SIPPs and I think there's a 40/month minimum. I anticipate starting a 40/month DD in April (in case I've not managed sufficient replacement Tesco ones) along with a 2,400 lump sum probably April/May depending on the stock market at the time.
    • dunroving
    • By dunroving 15th Nov 17, 12:38 PM
    • 540 Posts
    • 220 Thanks
    dunroving
    Don't want to sidetrack the thread but I'm in a situation where I will possibly be limited to the 2,880 limit for people with no employment income (I just retired).

    As the SIPP provider will top up the 20% tax element from HMRC, are the following calclations correct for a DD to achieve a 2,880 SIPP contribution over teh tax year:

    2,880 x 0.80 = 2,304
    2,304 divided by 12 = 192

    - so if I contributed 192 by DD, I'd end up with 2,880 in the SIPP and stay within the 2,880 limit?

    Thanks!
    • pip895
    • By pip895 15th Nov 17, 12:50 PM
    • 430 Posts
    • 234 Thanks
    pip895
    Don't want to sidetrack the thread but I'm in a situation where I will possibly be limited to the 2,880 limit for people with no employment income (I just retired).

    As the SIPP provider will top up the 20% tax element from HMRC, are the following calclations correct for a DD to achieve a 2,880 SIPP contribution over teh tax year:

    2,880 x 0.80 = 2,304
    2,304 divided by 12 = 192

    - so if I contributed 192 by DD, I'd end up with 2,880 in the SIPP and stay within the 2,880 limit?

    Thanks!
    Originally posted by dunroving
    The gross value is 3600 the 2880 is net so drop the 0.8 bit out of your calculation.
    • xylophone
    • By xylophone 15th Nov 17, 12:50 PM
    • 23,464 Posts
    • 13,640 Thanks
    xylophone
    You intend to start contributions from 6/4/2018?

    Why not a contribution of 240 a month starting on 6 April 2018 and taken each 6th month thereafter?

    You will then have contributed 2880 in the tax year and the provider will claim the tax relief of 720 over the year making a total of 3600.

    https://www.ft.com/content/db749266-1ea0-11e7-b7d3-163f5a7f229c
    • Mnd
    • By Mnd 15th Nov 17, 1:25 PM
    • 236 Posts
    • 272 Thanks
    Mnd
    The 2880 is how much you can pay, that's why xylophone is suggesting 240 a month.tax rebate will make it up to 3600
    • mark1959
    • By mark1959 15th Nov 17, 7:04 PM
    • 244 Posts
    • 257 Thanks
    mark1959
    Yes, I understand she would pay tax on the 1950, but she would still get the first 25% (the 650) tax free wouldn't she?
    Originally posted by bioboybill
    Yes.
    • Vortigern
    • By Vortigern 15th Nov 17, 7:17 PM
    • 2,310 Posts
    • 1,515 Thanks
    Vortigern
    Another question, if I sent up a small monthly direct debit ( to help in my search for more dds after the Tesco change next April ). Could I then put the remainder in towards the end of the financial year by debit card?
    Originally posted by Lily1
    There may be a monthly minimum for the DD.
    Originally posted by clivep
    HL's minimum DD is 20net, equivalent to 25gross.
    • Lily1
    • By Lily1 15th Nov 17, 10:19 PM
    • 168 Posts
    • 61 Thanks
    Lily1
    20 it is then, thanks.
    • Bazzh
    • By Bazzh 16th Nov 17, 8:40 AM
    • 24 Posts
    • 1 Thanks
    Bazzh
    Read through the posts regarding this subject. I am 72 retired and have a total income of 18500 gross, made up of state and company pensions. Am I right to assume I can pay 2880 into a Sipp and claim tax relief of 720 and withdraw 3550 ( 50 left in to keep account open) for the next 3 years.
    Many thanks
    • Mnd
    • By Mnd 16th Nov 17, 9:08 AM
    • 236 Posts
    • 272 Thanks
    Mnd
    Depends on the conditions on the provider..I think hargreaves lansdown req 1000.
    But your theory seems sound, and you can do this until you ar 75
    • The Book-keeper
    • By The Book-keeper 16th Nov 17, 9:24 AM
    • 45 Posts
    • 13 Thanks
    The Book-keeper
    You intend to start contributions from 6/4/2018?

    Why not a contribution of 240 a month starting on 6 April 2018 and taken each 6th month thereafter?

    You will then have contributed 2880 in the tax year and the provider will claim the tax relief of 720 over the year making a total of 3600.

    https://www.ft.com/content/db749266-1ea0-11e7-b7d3-163f5a7f229c
    Originally posted by xylophone
    Would you still be able to withdraw 3600 in the tax year 2018/19? I'll be in my 3rd year of doing this, I leave 1000 in my HL account at all times. Thanks
    • mjfp509
    • By mjfp509 16th Nov 17, 12:24 PM
    • 141 Posts
    • 40 Thanks
    mjfp509
    Read through the posts regarding this subject. I am 72 retired and have a total income of 18500 gross, made up of state and company pensions. Am I right to assume I can pay 2880 into a Sipp and claim tax relief of 720 and withdraw 3550 ( 50 left in to keep account open) for the next 3 years.
    Many thanks
    Originally posted by Bazzh
    Maybe more knowledgeable people will put me right, but in your situation, will you gain a lot as you would be already over the tax threshold (11,500) with your existing pensions, so the 720 tax relief you get added to your 2880, would get taken away again when you withdraw it? You will gain a bit by being able to take out the first 25% tax free, however.
    Last edited by mjfp509; 16-11-2017 at 12:35 PM.
    • Mnd
    • By Mnd 16th Nov 17, 12:38 PM
    • 236 Posts
    • 272 Thanks
    Mnd
    I think it's about 15 a month benefit to basic rate tax payer
    • mark1959
    • By mark1959 16th Nov 17, 6:40 PM
    • 244 Posts
    • 257 Thanks
    mark1959
    Read through the posts regarding this subject. I am 72 retired and have a total income of 18500 gross, made up of state and company pensions. Am I right to assume I can pay 2880 into a Sipp and claim tax relief of 720 and withdraw 3550 ( 50 left in to keep account open) for the next 3 years.
    Many thanks
    Originally posted by Bazzh
    Yes, as has been alluded to earlier you would pay 20% tax on 75% of the 3600, 0.2 x 2700 = 540, say 40 pension providers charges = 3020, 140 made.
    • Crabby
    • By Crabby 21st Nov 17, 4:27 PM
    • 732 Posts
    • 176 Thanks
    Crabby
    Hey ho, I'm a bit late finding out about this, but I'd like a bit of advice.
    I'm a 61 year old non tax payer, I doubt I will pay income tax until I receive my state pension.
    I've started a sipp with Hargreaves Lansdown, deposited 2880 and received the 720 top up so have the 3600. I've got my personal illustration and completed the risk assessment, I'm now waiting for the application.

    Now the question.
    What's the best way to proceed?
    Is it take the 900, then take 1700 in increments over the remaining months till April ( leaving 1000 in to keep the HL account open). Then pay in 240 a month from April and withdraw 240 a month.
    Or pay in 2880 next April and withdraw 3600 0ver the 12 months after the 900 has been added.
    Or is it something completely different?
    Winner winner, Chicken dinner.
    • Mnd
    • By Mnd 21st Nov 17, 5:29 PM
    • 236 Posts
    • 272 Thanks
    Mnd
    If you have it in cash, then yiu may as well take it out and put it in a interst paying account,
    • Crabby
    • By Crabby 21st Nov 17, 6:11 PM
    • 732 Posts
    • 176 Thanks
    Crabby
    Ok, thanks.
    Winner winner, Chicken dinner.
    • Audaxer
    • By Audaxer 21st Nov 17, 7:40 PM
    • 587 Posts
    • 255 Thanks
    Audaxer
    Hey ho, I'm a bit late finding out about this, but I'd like a bit of advice.
    I'm a 61 year old non tax payer, I doubt I will pay income tax until I receive my state pension.
    I've started a sipp with Hargreaves Lansdown, deposited 2880 and received the 720 top up so have the 3600. I've got my personal illustration and completed the risk assessment, I'm now waiting for the application.
    Originally posted by Crabby
    I've also just opened a SIPP with HL with the same amount. I didn't bother too much with the personal illustration as I'm just leaving it in cash until I decide where to invest it. I didn't see a risk assessment. What application are you waiting for?
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