Pension Recycling

5-Star

This is my first post so be gentle
I'm contributing to my company final salary pension scheme with AVC's going into a linked money purchase account, I also have a SIPP to which I transfer shares from company share plans when they mature. I hope to take early retirement later this year and intend to take a 25% lump sum (approx £250K) from the company pension but leave the SIPP untouched. On retirement a number of share options vest and after paying taxes I should have around £50K in shares. Ideally I would like to transfer the shares to my SIPP in the next tax year (so that I am not caught by the £50K pension contributon limit) but wonder if this will be seen as Pension recycling - the £50K contribution will be more than 30% above previous SIPP contributions and would be made within 12m of taking a lump sum thats more than 1% of life time allowance. Though I will be contacting HMRC I would be interested in peoples thoughts

5-Star

jamesd

The share value will provide a clear indication that it is not recycling of a lump sum in excess of the limit. The payment is not "because of" the pension commencement lump sum and you can prove that it is not. See the HMRC examples for some illustrations of this sort of thing.

Are you aware of the ability to use fully or partially unused £50k allowances from past years?

5-Star

Thanks, I'm aware of the ability to use past years allowances and have been able to use up the past allowance to date. If all goes to plan I hope to use up the 2012 allowance before I retire so will only have the £50k available in 2013. I never thought I would have to watch how much I was contributing to my pension but with the final salary and AVC's its surprising how quickly it eats into the allowance.