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  • FIRST POST
    • koops
    • By koops 19th Mar 17, 3:12 PM
    • 21Posts
    • 1Thanks
    koops
    Savings to SIPP
    • #1
    • 19th Mar 17, 3:12 PM
    Savings to SIPP 19th Mar 17 at 3:12 PM
    Hello.....My wife is 55 and earns £8000 a year,has no pension but has approx £30000 in savings gathering poor returns.I gather from this forum it would be wise to invest £6000 in a SIPP every year to benefit from the £2000 tax relief, maybe for 3 or 4 years when we plan to retire.My question is....Is a SIPP suitable for a novice,we are not seeking big returns(£2000 relief for 4 years is not bad!).Is HL,s own Conservative low risk portfolio suitable...many thanks,Koops
Page 1
    • AnotherJoe
    • By AnotherJoe 19th Mar 17, 3:39 PM
    • 6,517 Posts
    • 6,933 Thanks
    AnotherJoe
    • #2
    • 19th Mar 17, 3:39 PM
    • #2
    • 19th Mar 17, 3:39 PM
    You could just keep it in cash if you are too nervous too invest. It would still beat a savings account hands down. Or mix and match investments and cash, doesn't need to be all or nothing.
    • kidmugsy
    • By kidmugsy 19th Mar 17, 3:44 PM
    • 9,318 Posts
    • 6,111 Thanks
    kidmugsy
    • #3
    • 19th Mar 17, 3:44 PM
    • #3
    • 19th Mar 17, 3:44 PM
    Hello.....My wife is 55 and earns £8000 a year,has no pension but has approx £30000 in savings gathering poor returns.I gather from this forum it would be wise to invest £6000 in a SIPP every year to benefit from the £2000 tax relief, maybe for 3 or 4 years when we plan to retire.My question is....Is a SIPP suitable for a novice,we are not seeking big returns(£2000 relief for 4 years is not bad!).Is HL,s own Conservative low risk portfolio suitable...many thanks,Koops
    Originally posted by koops
    It might be OK just to leave it as cash. The interest rate will be utterly feeble but for 3 or 4 years that hardly matters. Note that if your wife were to withdraw tax-free lump sum of £2000 each year that would not inhibit her ability to continue to contribute £6000 net. At least I think not; we really need the view of one or two of the people hereabouts who understand the rules against recycling lump sums.

    But my main point is that she mustn't drawdown any more than her due TFLS because then she would be limited to contributing £4000 (gross) p.a. = £3200 net in future.

    P.S. Shouldn't she contribute £6400 net to get £8000 gross? Or am I too tired today to get the arithmetic right?
    Last edited by kidmugsy; 19-03-2017 at 3:47 PM. Reason: P.S.
    • xylophone
    • By xylophone 19th Mar 17, 4:18 PM
    • 21,614 Posts
    • 12,429 Thanks
    xylophone
    • #4
    • 19th Mar 17, 4:18 PM
    • #4
    • 19th Mar 17, 4:18 PM
    She can contribute up to £6400 to a SIPP and receive up to £1600 in tax relief.

    As others have said, she could simply leave the money uninvested and regard the tax relief as interest.

    http://www.hl.co.uk/partners/search/sipp?theSource=PCHLS&Override=0&adg=G+HLBS+HLS&gcl id=CMH1yqX84tICFYYcGwodjs0FfQ
    • MoneySavingUser
    • By MoneySavingUser 19th Mar 17, 4:44 PM
    • 1,600 Posts
    • 642 Thanks
    MoneySavingUser
    • #5
    • 19th Mar 17, 4:44 PM
    • #5
    • 19th Mar 17, 4:44 PM
    Note that if your wife were to withdraw tax-free lump sum of £2000 each year that would not inhibit her ability to continue to contribute £6000 net. At least I think not; we really need the view of one or two of the people hereabouts who understand the rules against recycling lump sums.
    Originally posted by kidmugsy
    Yes I think that is right:

    - Only draw the tax free lump sum to avoid MPAA triggering and;
    - The £7.5k rule applies for recycling purposes:

    http://adviser.royallondon.com/technical-central/pensions/contributions-and-tax-relief/recycling-of-tax-free-cash/

    Where recycling doesn't apply
    Jim takes a tax-free lump sum of £7,000 on 1 May 2015 with the intention of using it to pay significantly greater contributions to a registered pension scheme.
    The amount of the tax-free lump sum doesn't exceed £7,500 and no other lump sums have been paid to Jim in the last 12 months. The recycling rule isn't triggered as the amount of the tax-free lump sum is less than £7,500.
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