SIPP: which % of my earnings?

Aegis

max11 wrote: »

thanks for your opinion that I quite agree with.
just a clarification, when that taxation you are talking about is going to happen?

is there any taxation on the eventual value increase over the years? I suppose no!

I repropose the question, even if I understand it is not an easy one. Generally speaking, is there any thumb rule? which %?!
just the money I do not need?

The tax charge is variable, which is why I didn't include a specific number. If you elect for unsecured drawdown of the plan, then between crystallisation of the policy and age 75, the tax charge for leaving the money to a beneficiary (other than providing a pension for a surviving spouse or financial dependent) would be 35%. From age 75, when the pension becomes an ASP (assuming no annuity is purchased at that time), the tax charge rises to 70% if the remaining fund is not used to provide a pension for a dependent or to make a charitable donation.

Prior to crystallisation, it's tax free to pass the benefits as a lump sum to a beneficiary.


Edit: Just to add, this tax charge is only payable on the death of the pension holder. It's not cumulative with Inheritance Tax (as it doesn't form part of the estate), so the tax position on death can still be better than directly held assets for someone with an estate in excess of the nil-rate band.

jamesd

max11, it's taxed when you start to take pension income, which is what crystallising benefits means.