Tax on unused SIPP after death

madeinireland_2 · 24 January 2015 at 4:57PM

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 · 24 January 2015 at 7:26PM

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

jamesd · 24 January 2015 at 11:39PM

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.