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  • FIRST POST
    • mjfp509
    • By mjfp509 11th Mar 17, 4:11 PM
    • 141Posts
    • 41Thanks
    mjfp509
    Sipp Query, Withdrawal & Personal Tax Allowance
    • #1
    • 11th Mar 17, 4:11 PM
    Sipp Query, Withdrawal & Personal Tax Allowance 11th Mar 17 at 4:11 PM
    Although a few years to go yet, I would like to retire at 55 if possible and am thinking of starting a SIPP, which will provide a yearly income until I reach 60, when my DB pension will start.

    Lets imagine I have £57,500 in my SIPP by the time I reach 55, so £57,500 shared by 5 years is £11,500 per year (personal tax allowance from April). By the time I reach 60, the SIPP will be exhausted.

    Obviously, I am aware the personal tax allowance will have risen by then, so these calculations are only hypothetical on current rates.

    Can this amount (£11,500) be withdrawn each year tax free, as I won't be working and I would be using this amount as my retirement annual income?

    Thanks.
Page 1
    • NoMore
    • By NoMore 11th Mar 17, 4:17 PM
    • 145 Posts
    • 117 Thanks
    NoMore
    • #2
    • 11th Mar 17, 4:17 PM
    • #2
    • 11th Mar 17, 4:17 PM
    Don't forget your 25 % TFLS.


    So you could actually have a pot of £76666 and withdraw it over 5 years to zero and pay no income tax.


    Year 1 25% tax free (£19166) + Tax allowance (£11500)
    Years 2 -5 £11500 each year.


    Gives you an average annual retirement income of £15333.


    Figures rounded and not account of inflation or investment gains of course.
    • Dazed and confused
    • By Dazed and confused 11th Mar 17, 4:38 PM
    • 1,936 Posts
    • 872 Thanks
    Dazed and confused
    • #3
    • 11th Mar 17, 4:38 PM
    • #3
    • 11th Mar 17, 4:38 PM
    Theoretically you can now have upto £22500 taxable income before you'd have to pay any income tax (in 2017:18) but that would involve a very specific mix of pension (or wages/business profits), savings interest and dividends

    Your sipp should be fine providing you genuinely have no other income in the years you draw down from the sipp
    • zagfles
    • By zagfles 11th Mar 17, 6:02 PM
    • 12,495 Posts
    • 10,496 Thanks
    zagfles
    • #4
    • 11th Mar 17, 6:02 PM
    • #4
    • 11th Mar 17, 6:02 PM
    Don't forget your 25 % TFLS.


    So you could actually have a pot of £76666 and withdraw it over 5 years to zero and pay no income tax.


    Year 1 25% tax free (£19166) + Tax allowance (£11500)
    Years 2 -5 £11500 each year.


    Gives you an average annual retirement income of £15333.


    Figures rounded and not account of inflation or investment gains of course.
    Originally posted by NoMore
    Or could use UFPLS (google it) and withdraw £15333 each year with no tax to pay.
    • NoMore
    • By NoMore 11th Mar 17, 6:15 PM
    • 145 Posts
    • 117 Thanks
    NoMore
    • #5
    • 11th Mar 17, 6:15 PM
    • #5
    • 11th Mar 17, 6:15 PM
    Thanks zagfles, forgot about UFPLS, slighlty different way to withdraw it but the maths work out the same either way for average yearly tax free income over the 5 years.
    • mjfp509
    • By mjfp509 12th Mar 17, 1:27 PM
    • 141 Posts
    • 41 Thanks
    mjfp509
    • #6
    • 12th Mar 17, 1:27 PM
    • #6
    • 12th Mar 17, 1:27 PM
    Thanks for your input everyone, definitely given me something to think about and do. Now got to think about what SIPP portfolios to buy !
    • missile
    • By missile 12th Mar 17, 1:33 PM
    • 9,020 Posts
    • 4,388 Thanks
    missile
    • #7
    • 12th Mar 17, 1:33 PM
    • #7
    • 12th Mar 17, 1:33 PM
    Good plan, with I had been able to do that :-)
    "A nation's greatness is measured by how it treats its weakest members." ~ Mahatma Gandhi
    Ride hard or stay home
    • mjfp509
    • By mjfp509 12th Mar 17, 3:28 PM
    • 141 Posts
    • 41 Thanks
    mjfp509
    • #8
    • 12th Mar 17, 3:28 PM
    • #8
    • 12th Mar 17, 3:28 PM
    Been looking around. Think I'll go with the Vanguard Target Retirement 2025 Fund for the SIPP. Seems to suit my needs.
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