Early-retirement wannabe

MallyGirl

https://forums.moneysavingexpert.com/discussion/comment/81878201#Comment_81878201

I had a VirginOne account for a long time and they did keep asking me if it was ok to drop the facility amount. I just said no and they never forced it. I moved away once it became a legacy product and the rates became unattractive

Top_of_the_Stocks

Martin himself said anyone can put up to £60,000 a year into a Self Invested Savings Plan. That includes 25% tax refund claimed by the SIPP provider. £60k = £45k from me and £15k from the taxman. The same again for the Mrs.

Remember I have a Drawdown pension I can dip into anytime.

Just been reading about setting up SIPP's for my grandsons that they can't touch until they're 57 (at the moment).

I put in £1,000 a year and the taxman gives them £250. Nice?

Pat38493

https://forums.moneysavingexpert.com/discussion/comment/81878586#Comment_81878586

Only if you have sufficient qualifying income to match the £60,000.

You cannot do this for example if you have no income, or your only income is from pensions.

MallyGirl

@Top_of_the_Stocks

If you have no earned income then you are limited to contributing £3600 gross to your pension.

If you have contributed £45k to SIPP and received £15k from the revenue when you don't have enough earnings then you are going to get a significant tax bill. The responsibility is on you to stick within the limits

QrizB

Martin himself said anyone can put up to £60,000 a year into a Self Invested Savings Plan.

Martin says a lot of things, but often the reality is more complex.

You're limited to your "relevant UK earnings"; see list here. If you have relevant earnings of less than £3600, you're limited to £3600 gross / £2880 net.

That includes 25% tax refund claimed by the SIPP provider. £60k = £45k from me and £15k from the taxman. The same again for the Mrs.

Relief-at-source is paid at 20%, not 25%. A £60k gross contribution would require you to pay in £48k and receive £12k tax relief. Alternatively, paying £45k into a RAS pension would earn £11.25k of tax relief, for a total of £56.25k.

If you and your wife have both made £45k RAS pension contributions without sufficient relevant UK earnings, you can expect complications to ensue.

Remember I have a Drawdown pension I can dip into anytime.

That makes it worse, not better; you're now subject to the Money Purchase Annual Allowance, so the theoretical £60k maximum is reduced to £10k.

SarahB16

https://forums.moneysavingexpert.com/discussion/comment/81878264#Comment_81878264

Interesting to read this. I still have my Virgin One account even though I have effectively paid off my mortgage but they have never asked me to reduce my facility amount even though I only keep at the very most c.£2k in it. I now use it as a current account but with easy access to draw on my facility if required.

Top_of_the_Stocks

I am 71 with a State Pension. I pay no tax. I have a drawdown pension I don't touch. I have a SIPP with £60k in supplied by a reputable investment firm. They apply for the tax rebate not me.

For your information my investments made £1,000 plus today alone, and the FTSE was down.

Top_of_the_Stocks

I appreciate the advice above and for people earning an income and paying PAYE it applies.

I'm investing my money that I paid tax on years ago and getting it back. HL SIPP did not ask me to prove my income. I don't earn a penny.

I could sell my property for £325,000, put the cash in my pocket and pay no tax.

Smudgeismydog

https://forums.moneysavingexpert.com/discussion/comment/81877830#Comment_81877830

In addition to the £90k that has ‘just’ been put into SIPPs, as noted above, I’m also concerned about

”Our property in Trust”

QrizB

I appreciate the advice above and for people earning an income and paying PAYE it applies.

I'm investing my money that I paid tax on years ago and getting it back. HL SIPP did not ask me to prove my income. I don't earn a penny.

If you speak to HL now, before the end of the tax year, and explain your error they might be able to reverse your pension contributions before HMRC get involved.

I could sell my property for £325,000, put the cash in my pocket and pay no tax.

If your property is in trust, it's probably not yours to sell.