Tax on unused SIPP after death

madeinireland_2

I have a plan to use a SIPP to help fund myself until my defined benefit pension is taken.

The basic idea is to take the 25% tax free at 55 and then withdraw the personal allowance until I take the defined benefit pension. As the DB pension will be close or even above the 40% tax limit I would then stop withdrawing from the SIPP or use up any spare only. The DB scheme should be more than enough

Taking this approach could leave me with a sum left - what would then happen to it on death ? Am I right in thinking that with the new rules it would pass on tax free to my heirs ? Also do the rules change at 75 in any way as with the current position ?

Thanks...

zagfles

Under the new proposed rules basically, before 75 it's tax free, after 75 it's taxable on the benficiaries.

jamesd

Have you considered making some use of Venture capital Trust investing? That'll pay 30% income tax rebate, capped at the amount of tax actually paid during the year. You have to hold for five years before selling so you can effectively create a deferred tax free income stream.

madeinireland_2

Hi james,

Thanks - is there somewhere I can read more about that as I'd like to investigate it further.

Thanks...

jamesd

Try here and here to learn more about them.