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  • FIRST POST
    • LoopySnooker
    • By LoopySnooker 4th Jan 18, 1:30 PM
    • 14Posts
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    LoopySnooker
    SIPP Drawdown Help Required
    • #1
    • 4th Jan 18, 1:30 PM
    SIPP Drawdown Help Required 4th Jan 18 at 1:30 PM
    Hi folks,

    I'm just after a bit of guidance regarding drawdown on my wife's SIPP from April. It is with HL and all in cash (just over £20k), as we didn't want to risk investing for such a short term.

    She will be finishing work at the end of March and won't have any income until her DB pension starts in either 2020 or 2021 (state pension 2024). Therefore, we are looking to use the SIPP to bridge the gap for 2 or 3 years.

    The options I have considered so far are:

    1. Take 25% tax free in April and drawdown approx £900/month until it runs out (adding £2880 every April for the tax relief top-up)
    2. Drawdown approx £1200/month until it runs out (adding £2880 every April)

    Are there any other (better ?) options to consider apart from the above ? We won't necessarily need the money each month but I thought it would be better take it before the DB starts so there won't be any tax to pay. One other thing to consider is that we currently claim Marriage Allowance so it would be better if that can continue.

    Thanks in advance for any suggestions.
Page 1
    • pip895
    • By pip895 4th Jan 18, 4:17 PM
    • 494 Posts
    • 280 Thanks
    pip895
    • #2
    • 4th Jan 18, 4:17 PM
    • #2
    • 4th Jan 18, 4:17 PM
    As the money is earning ~zero interest in HL you might as well take it all out as one lump just keeping within your wife's tax allowance each year so there is nothing to pay in tax. Take a look elsewhere on this site for a suitable interest baring account to put it in.
    • xylophone
    • By xylophone 4th Jan 18, 4:37 PM
    • 24,044 Posts
    • 14,048 Thanks
    xylophone
    • #3
    • 4th Jan 18, 4:37 PM
    • #3
    • 4th Jan 18, 4:37 PM
    The money is earning no interest.

    She could take the 25% lump sum and her full personal allowance after April 6th and use some form of savings /current account/regular savings account combination - she can continue with the £2880, perhaps not doing so for this tax year until March 2018 - she can then continue to draw down from the SIPP as required.
    • LoopySnooker
    • By LoopySnooker 4th Jan 18, 7:08 PM
    • 14 Posts
    • 0 Thanks
    LoopySnooker
    • #4
    • 4th Jan 18, 7:08 PM
    • #4
    • 4th Jan 18, 7:08 PM
    Many thanks for the suggestions. We've both got Santander 123 accounts and a couple of regular savers so I might end up taking some out of there (replenishing in April from my wife's SIPP) and topping up my own pension in March. I've got a S&S ISA too (HSBC Global Strategy Balanced) so I might also add to this in April.

    I think the key is to get as much back out of the SIPP in April whilst staying within her tax allowance.

    Thanks again.
    • Dazed and confused
    • By Dazed and confused 4th Jan 18, 8:16 PM
    • 2,092 Posts
    • 944 Thanks
    Dazed and confused
    • #5
    • 4th Jan 18, 8:16 PM
    • #5
    • 4th Jan 18, 8:16 PM
    Don't forget that even if your wife has applied for Marriage Allowance (you state One other thing to consider is that we currently claim Marriage Allowance so it would be better if that can continue. but that isn't possible, only one person can apply, whoever is agreeing to the lower allowance) she can still benefit from the savings starter rate of tax which is currently 0% so even if she is getting enough taxable savings interest to exceed (with the taxable SIPP payments) her reduced personal allowance she may not have any actual tax to pay by virtue of the tax rate being 0%.

    If she gets huge amounts amount of interest she may also be able to benefit from the Personal Savings Allowance but from your op I think it's highly unlikely she will be able to benefit from that from the 2018:19 tax year until she starts to take her DB pension, or possibly even not until when the State Pension starts depending on how much DB pension is due.
    Last edited by Dazed and confused; 04-01-2018 at 8:20 PM.
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