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    • nxdmsandkaskdjaqd
    • By nxdmsandkaskdjaqd 3rd Jan 17, 7:39 AM
    • 443Posts
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    nxdmsandkaskdjaqd
    Paying £2880 into pension when retired
    • #1
    • 3rd Jan 17, 7:39 AM
    Paying £2880 into pension when retired 3rd Jan 17 at 7:39 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 9:14 AM.
Page 15
    • hogweed
    • By hogweed 20th Mar 17, 8:41 PM
    • 80 Posts
    • 12 Thanks
    hogweed
    I'm not quite sure why you are doing this extra (pretty meaningless) calculation of what your salary was and taking off what your employer paid and then going below the resulting limit for a few hundred quid to be marginally more cautious, pending finding out what your NHS pension value calc actually is which will be an entirely different number.
    Originally posted by bowlhead99
    Hi, sorry I haven't responded before now but life is extremely stressful at the moment. Fact is, despite being moderately intelligent, I have absolutely no knowledge of all this stuff, and I have to try and pick through what you guys are trying to say to me.

    I used to fix computers for a living, and would try to explain quite rudimentary things to my customers Ė things which, to me, are as wonderfully simple and logical as 2+2=4. And I flatter myself that Iím a natural teacherÖ and yet I could see them feeling physically ill as they tried to get their heads around it.

    And itís the same here, but the other way round Ė youíre talking Japanese, and I donít speak it. So eventually, with all the other stresses in my life at the moment (considerable), I had to cut off at some point and decide ďThis is what I shall doĒ, or I'd go mad.

    So, for better or worse, I have.

    Your help has been enormously appreciated
    • moneyfoolish
    • By moneyfoolish 21st Mar 17, 8:26 AM
    • 402 Posts
    • 248 Thanks
    moneyfoolish
    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".
    Originally posted by meantime
    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.
    Last edited by moneyfoolish; 21-03-2017 at 8:28 AM.
    • missile
    • By missile 21st Mar 17, 9:59 AM
    • 8,574 Posts
    • 4,085 Thanks
    missile
    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
    • missile
    • By missile 21st Mar 17, 12:10 PM
    • 8,574 Posts
    • 4,085 Thanks
    missile
    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
    • jerrysimon
    • By jerrysimon 21st Mar 17, 1:21 PM
    • 194 Posts
    • 100 Thanks
    jerrysimon
    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
    Last edited by jerrysimon; 21-03-2017 at 1:28 PM.
    • missile
    • By missile 21st Mar 17, 1:47 PM
    • 8,574 Posts
    • 4,085 Thanks
    missile
    I should have around 12K in my wife's SIPP (H&L) which I have been running the last 18 months held as cash.
    Originally posted by jerrysimon
    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
    "A nation's greatness is measured by how it treats its weakest members." ~ Mahatma Gandhi
    Ride hard or stay home
    • jerrysimon
    • By jerrysimon 21st Mar 17, 2:43 PM
    • 194 Posts
    • 100 Thanks
    jerrysimon
    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
    Originally posted by missile
    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
    • By meantime 21st Mar 17, 4:14 PM
    • 39 Posts
    • 3 Thanks
    meantime
    * You are too late to give an instruction to HL for a payment to be made this tax year.
    Originally posted by missile
    Does anyone know if it's still possible with any other provider?
    • Nationwide8
    • By Nationwide8 22nd Mar 17, 2:14 PM
    • 242 Posts
    • 95 Thanks
    Nationwide8
    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
    • By Nationwide8 22nd Mar 17, 2:19 PM
    • 242 Posts
    • 95 Thanks
    Nationwide8
    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.
    Originally posted by missile
    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.
    • LIttleOwl
    • By LIttleOwl 22nd Mar 17, 4:17 PM
    • 7 Posts
    • 45 Thanks
    LIttleOwl
    * 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.
    • greenglide
    • By greenglide 22nd Mar 17, 4:46 PM
    • 2,539 Posts
    • 1,585 Thanks
    greenglide
    Opening one is fine, normally right up to the last day of 5th April.

    It seems to be the payments that only get made on certain dates.
    • AnotherJoe
    • By AnotherJoe 22nd Mar 17, 4:50 PM
    • 5,681 Posts
    • 5,906 Thanks
    AnotherJoe
    * 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.
    Originally posted by LIttleOwl
    No, the two are entirely different. As you'll see on the HL website you can open one in a few minutes.
    • missile
    • By missile 22nd Mar 17, 4:54 PM
    • 8,574 Posts
    • 4,085 Thanks
    missile
    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.
    Originally posted by Nationwide8
    Correct
    In addition: Please be advised, if you request the 25% lump sum from HL today it will be paid not later than 28th April.
    Last edited by missile; 22-03-2017 at 5:00 PM.
    "A nation's greatness is measured by how it treats its weakest members." ~ Mahatma Gandhi
    Ride hard or stay home
    • LIttleOwl
    • By LIttleOwl 22nd Mar 17, 5:17 PM
    • 7 Posts
    • 45 Thanks
    LIttleOwl
    Just to clarify is there still time to open and make a payment of £2880 into a new Sipp with HL for 2016/17. Sorry for yet another question but thanks in advance.
    • Nationwide8
    • By Nationwide8 22nd Mar 17, 6:45 PM
    • 242 Posts
    • 95 Thanks
    Nationwide8
    Correct
    In addition: Please be advised, if you request the 25% lump sum from HL today it will be paid not later than 28th April.
    Originally posted by missile
    OK Thanks,got it.I only knew about a SIPP and the £720 etc from this board and was "late" in the 16-17 tax year investing in one ( 9th Jan ).Next tax year hopefully will be different,just have to "watch" PA allowance.

    Can I also ask,if I withdraw eg £40 out of the rest of the SIPP over the tax free 25% will HMRC give HL my tax code from that so when I draw a larger amount at a later date in 2017 it will not be taxed ?? ( I don't have/will not have enough income to go over PA 17-18 )
    Last edited by Nationwide8; 22-03-2017 at 7:01 PM.
    • jerrysimon
    • By jerrysimon 23rd Mar 17, 6:22 AM
    • 194 Posts
    • 100 Thanks
    jerrysimon
    Just to clarify is there still time to open and make a payment of £2880 into a new Sipp with HL for 2016/17. Sorry for yet another question but thanks in advance.
    Originally posted by LIttleOwl
    Yep you can open an account online and do it up to 5/4/17 but I would not leave it to the last day. I did it about a week before this date last year to put in a lump sum to cover my wife's earning for 15/16. I have been topping it up this year to again include her allowance before she gave up her main job August last year.

    I think there are charges if you empty it within the first year.


    Jerry
    • missile
    • By missile 23rd Mar 17, 10:01 AM
    • 8,574 Posts
    • 4,085 Thanks
    missile
    OK Thanks,got it.I only knew about a SIPP and the £720 etc from this board and was "late" in the 16-17 tax year investing in one ( 9th Jan ).Next tax year hopefully will be different,just have to "watch" PA allowance.

    Can I also ask,if I withdraw eg £40 out of the rest of the SIPP over the tax free 25% will HMRC give HL my tax code from that so when I draw a larger amount at a later date in 2017 it will not be taxed ?? ( I don't have/will not have enough income to go over PA 17-18 )
    Originally posted by Nationwide8
    Your first drawdown will generate a Tax Code from HMRC. In my experience this happens quickly and you will receive a notification from HMRC.
    Please note; HL may close your account if balance falls below £1,000 and you will suffer early closure charges.
    You can avoid this issue, by drawing the balance in instalments over 12 months as was suggested to me by Jamesd.
    Last edited by missile; 23-03-2017 at 10:16 AM.
    "A nation's greatness is measured by how it treats its weakest members." ~ Mahatma Gandhi
    Ride hard or stay home
    • Nationwide8
    • By Nationwide8 23rd Mar 17, 10:58 AM
    • 242 Posts
    • 95 Thanks
    Nationwide8
    Your first drawdown will generate a Tax Code from HMRC. In my experience this happens quickly and you will receive a notification from HMRC.
    Please note; HL may close your account if balance falls below £1,000 and you will suffer early closure charges.
    You can avoid this issue, by drawing the balance in instalments over 12 months as was suggested to me by Jamesd.
    Originally posted by missile
    Thank you,so I shouldn't get taxed on any drawdown once HL have my tax code ?? As my income definitely will not go over PA 17-18.

    Yes I did realise about leaving the £1000 in but only from this thread,the information is so helpful !!
    • missile
    • By missile 23rd Mar 17, 10:58 AM
    • 8,574 Posts
    • 4,085 Thanks
    missile
    When you transfer the balance from SIPP to SIPP drawdown the SIPP account disappears.

    You might want to monitor HL accounts and perhaps print out, before closure.
    "A nation's greatness is measured by how it treats its weakest members." ~ Mahatma Gandhi
    Ride hard or stay home
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