Moving my SIPP to my NISA is this a bad idea?

Notohulltigers

Hi all. Have read this stuff until my head spins so grateful for anyone who could explain if my thinking is wrong-headed...

I am living off final salary pension, not yet receiving SP and pay basic rate tax. I also have £100k + in flexible drawdown SIPP with HL. My intention is to withdraw £18,750 per annum from SIPP, pay 20% tax yielding £15k net and put this into my HL NISA.

Why? Well, why not? I'll have to pay tax at some stage when I withdraw the SIPP money and I might as well do it now in this way and I know I'll pay just 20%. If I decide to withdraw a large chunk from my SIPP in any future year (long cruise or emergency), I'll pay 40% tax on part of it; if it's already in my NISA, I won't.

The annual charges in SIPP or NISA with HL seem to be the same (0.45%) so apart from some small transaction charges, I can't see any downside to doing this given that I never intend to buy an annuity (which would, of couse, be a better purchase from the gross amount in the SIPP).

Any comments gratefully received, please bear in mind I do not claim to know what I am talking about. Apologies if covered earlier: have tried "Search" until fingres bled...

atush

Have you taken your TFLS of 25% yet? Take that first, it is tax free and will fill almost 2 years.

Then, what age are you as you are already taking your FS pension? Did you take it early/reduced?

mgdavid

The question that occurs to me (a fellow complete amateur!) is how do you compare the growth i.e. investment performance?
Do you mean cash NISA or S&S NISA?
And what is your £100k+ invested in within the SIPP?
If you intend S&S NISA then will you be able to exactly reproduce the SIPP's range of investments so that growth is comparable?

edit: also it just occurred to me, if you leave it within the SIPP and don't spend it (or die too young!) then it can pass to spouse or dependents tax-free with Mr Osborne's latest generosity whereas ISAs will fall within the estate for IHT etc.

kidmugsy

Notohulltigers wrote: »

I am living off final salary pension, not yet receiving SP and pay basic rate tax. I also have £100k + in flexible drawdown SIPP with HL. My intention is to withdraw £18,750 per annum from SIPP, pay 20% tax yielding £15k net and put this into my HL NISA.

Since the personal allowance against income tax, and the 20% band, are both "use it or lose it" arrangements, there's good reason for your scheme, as long as mgdavid's point about Inheritance Tax doesn't bother you. In fact, if you can squeeze a bit more out at 20% tax and find a good investment for it, you could do that too. Gold sovereigns in a safety deposit, say, might be a useful tax-efficient diversification of your investments? (It ain't the cheapest, but the Royal Mint is now offering such a service.)

P.S. I rather like the idea of "Hull Tigers". Roar!

FatherAbraham

kidmugsy wrote: »

Gold sovereigns in a safety deposit, say, might be a useful tax-efficient diversification of your investments? (It ain't the cheapest, but the Royal Mint is now offering such a service.)

Gold sovereigns are terribly easy to buy, but a pig to sell.

Warmest regards,
FA

atush

A sipp can Always pass to a spouse tax free so disregard this. Always if a pension. sometimes if a dependent. And all this will change soon to widen this.


Gold is fine but still too pricey for me to buy any

Notohulltigers

...am 62, took FS pension a little later than I needed to at 61...have 3 more years before State Pension when the likelihood of paying 40% tax on any SIPP withdrawals increases (unless earning limits have been raised as recently suggested).

My SIPP is invested in unspectacular but OK Investment trusts and my intention is just to mirror the invesments when I move the money (minus 20%) into my NISA so any growth (or otherwise) won't be affected by where the investment is held.

Have spent the last year collating various odds and ends of pensions to create this single pot and haven't really started thinking about inheritance or gold or owt like that. Just thought I'd try to grow it a bit, get the tax situation sorted and then do something sensible and/or interesting with it.

Really encouraged so far that my thoughts are not completely batty.

"Hull Tigers" is a truly depressing concept...sorry, slightly off topic. CTWD

atush

usually it is good to empty a sipp before you take a DB pension, as you can use your PA.

In your case, if you expect to move up to HRT then yes emptying it at basic rate is a good idea.

Consider deferring your SP to allow yourself more time to empty the Sipp?

Notohulltigers

atush wrote: »

usually it is good to empty a sipp before you take a DB pension, as you can use your PA.

In your case, if you expect to move up to HRT then yes emptying it at basic rate is a good idea.

Consider deferring your SP to allow yourself more time to empty the Sipp?

Interesting...hadn't thought of deferring SP but having searched here, I can see it has been discussed a lot and is an attractive option. This could work very well as my wife will be waiting 2-3 years after before she receives hers. In answer to earlier question, yes, have taken 25% tax free which is in cash/ premium bonds/ cash ISAs (and smoothing out the transition from salary to pension).

atush

mind you, if either of you are deferring after april 2016, you wont get the 10.4% that those who defer today get. It will be about half.

But in your case (if not the wife) then it will at least keep you out of HRT for a little.

Does the wife have a pension? Does she have a DC/PP? She has a personal allowance to use as well.

kidmugsy

FatherAbraham wrote: »

Gold sovereigns are terribly easy to buy, but a pig to sell.

Aye, but will they be hard to sell when the whole world wants them? You buy gold, after all, as insurance against extreme circumstances, not as an alternative to premium bonds.