Paying £2880 into pension when retired
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It has been this rate for a number of years and with just over 2 months to the start of the 2017-2018 tax year, it seems unlikely a change will be made at the last minute. Watch out for the last Spring budget on 8/3/17.0
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I wanted to check that my calculations were correct for the 2017/18 tax year.
Personal Allowance = £11500
Income = £5817
Pay in £2880 - HMRC add £720 = Making £3600
Withdrawing the £3600, the tax free component is £900, taxable is £2700
So to use all of my Personal Allowance I can take an additional £2983 of other income/pension from other sources. Is this correct?0 -
There are effectively no charges if you use HL and put the money in cash. However, if you close the account in the first year you will get hefty closure charges.
So, put in your £2880, get £720 from HMRC. Withdraw £3550. Keep SIPP account open until next year and do same again, until 75. Dont forget tho, it is only £720 profit for those who wont reach the BR tax threshold.
Is £50 the minimum you have to keep the account open? Or can you just leave £1 in?0 -
I spoke to HL about this and they stated that £1000 was in the T&C's however, there was some discretion on this.0
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nxdmsandkaskdjaqd wrote: »I spoke to HL about this and they stated that £1000 was in the T&C's however, there was some discretion on this.
so the pay £2880 in then draw all the £3600 does'nt work then?0 -
so the pay £2880 in then draw all the £3600 does'nt work then?
Not if you don't want a fee for opening an account and quickly closing it again making the pension provider do all the necessary work without giving them any chance whatsoever to make any ongoing fees from it.
However, other providers may do it without a fee and failing that you can just do £2880 in £2600 out (which gives you almost enough back in your hand to do the max contrib for next year starting April), and £1000 of pension assets so they don't close the account. Most of the £1000 would be the free tax relief anyway.
Or as someone mentioned above, the t&c may be waived at their discretion... so for example if you already have ISAs or other accounts with them and you go to take out most of your pension in late March before the end of the tax year, then they email you to say "hey this new account is pretty low, we'd like to close it", you can probably just say "well hold on minute I'm a genuine customer and I'd like to put another few thousand in there next month rather than have to find another provider for all my products", I'd speculate you could keep it.0 -
It works fine, just maybe not at HL. I tend to suggest Virgin for that.
If you want to do it at HL what I suggest is taking the tax free lump sum then regular income from the rest of £225 a month. And also setting up a regular direct debit payment into the existing account. The regular payments will mostly cover the cost of the £240 a month direct debit that it takes to pay in £2880 a year. Or you could set the DD to £225 as well and tweak at the end of the tax year. I'd also try to set things up so that you have £450 left in the drawdown account at the end of the tax year. That allows time for the tax relief on the March credit to arrive in your account in April and one month more of safety margin. Then you can move the just ended chunk into drawdown and take out the 25% from that.
After that getting of the safety margin in place it then runs itself via the DD and payments and all you have to do is put the next £3,600 into drawdown once a year near the end of April.0 -
I plan to withdraw most of the money, just leaving enough to keep HL happy (say £500).
In addition, I wanted to check that my overall basic calculations are correct for the 2017/18 tax year.
Personal Allowance = £11500
Income = £5817
Pay in £2880 - HMRC add £720 = Making £3600
Withdrawing the £3600, the tax free component is £900, taxable is £2700
So to use all of my Personal Allowance I can take an additional £2983 of other income/pension from other sources. Is this correct?0 -
Correct. Assuming that none of the other income is interest.0
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nxdmsandkaskdjaqd wrote: »I plan to withdraw most of the money, just leaving enough to keep HL happy (say £500).
In addition, I wanted to check that my overall basic calculations are correct for the 2017/18 tax year.
Personal Allowance = £11500
Income = £5817
Pay in £2880 - HMRC add £720 = Making £3600
Withdrawing the £3600, the tax free component is £900, taxable is £2700
So to use all of my Personal Allowance I can take an additional £2983 of other income/pension from other sources. Is this correct?
I thought you had to leave £1000 in?0
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