SIPP provider with quick recovery of Basic rate tax?

Shedman

Taking heed of JamesD's sage advice about going into capped drawdown this year in order to keep the £40k Annual Allowance I am looking to put about £75k gross (so actual payment £60k) into a SIPP this year and then take the 25% TFLS and a small amount (say £1k) of the GAD cap before April 5th.

Starting to fill in a HL Vantage SIPP application I note they indicate that they will be only be getting tax receipt on 21st April which is too late for my plan (as I want to maximise TFLS).

Anybody know which low cost providers have a quicker turn around on getting the tax back (looking at XO, BestInvest, Sippdeal)?

Alternatively am I allowed to do one of the following and still keep the £40k AA -
a) I take the TFLS of the £60k this year and £1k from capped drawdown (ie start capped drawdown) and then after 21 April (when HL get the tax back) take a further TFLS from the tax recovery or

b) wait until after 21 April and just draw down the 25% TFLS of the whole £75k sum but no other drawdown (by the way is there a special way that has to be done so that it isn't treated as being in any form of drawdown?)

Note I don't actually need any drawdown income next year so either is OK for my purposes

Open to other suggestions as well if neither of these are workable.

Thrugelmir

Always found XO to be administratively efficient.

jamesd

You can do either of those things, just say you want capped drawdown. Best to phone HL to confirm with them that that is also their understanding. You can also ask them to confirm that you can pay in the 40k per year and have that join the capped drawdown pot later.

dunstonh

The companies with weaker finances or budget costs tend to not pre-fund the tax relief. It does appear that most DIY companies do not pre-fund.

Sillychuckie

With HL, I used to get my 25% basic rate tax back on a SIPP contribution regularly as clockwork.
They even provide a scedule upfront which tells you exactly which day you'll get it credited, depending on when you made your SIPP contribution.

However, since moving to II, I have been waiting over 4 months for receipt of the tax relief for some of my contributions.

I was unaware of the fact, but it seems as though HL were funding the relief out of their own pocket, then reclaiming it from HMRC. Interactive Investor however, will only pass it on once they receive it from HMRC.

II State:
"I can confirm that our SIPP administrators have still not received the tax reclaim from HMRC. HMRC are only legally obliged to deposit the tax relief within a year of the deposit. They usually pay these to us bi-monthly however we have not received any reclaims for the past two months. We apologise for any inconvenience this may cause however we cannot pass this payment across to you until we receive this.".

Its ridiculous really. I'd steer well clear of II for that reason. 1 year is way too long. My main concern is that when it comes to doing my tax return, I wont know whether I should add it to a contribution record 'where they haven't added 25%'.

SC.

Thrugelmir

dunstonh wrote: »

The companies with weaker finances or budget costs tend to not pre-fund the tax relief.

Has nothing to do with weak finances. As tax relief is in essence client funds. Not Company funds. No commercial sense in doing so either.

dunstonh

Thrugelmir wrote: »

Has nothing to do with weak finances. As tax relief is in essence client funds. Not Company funds. No commercial sense in doing so either.

It does. Prefunding costs money. You are talking potentially many millions of pounds which is effectively being loaned from company funds.

zagfles

dunstonh wrote: »

It does. Prefunding costs money. You are talking potentially many millions of pounds which is effectively being loaned from company funds.

So what? Just because a platform doesn't pre-fund doesn't mean their finances are "weak". HL look to have a very healthy balance sheet. They simply choose not to give interest free loans, and why should they.

Other platforms may choose to give interest free loans but then incorporate the "interest" in their charges. Like furniture shops which offer "interest free" credit. They usually charge more than shops which don't.

Linton

zagfles wrote: »

So what? Just because a platform doesn't pre-fund doesn't mean their finances are "weak". HL look to have a very healthy balance sheet. They simply choose not to give interest free loans, and why should they.

Other platforms may choose to give interest free loans but then incorporate the "interest" in their charges. Like furniture shops which offer "interest free" credit. They usually charge more than shops which don't.

Isnt it being implied that H-L can only announce when they will pay tax rebates because they do pre-fund? If II's comment is correct the timing of payments from HMRC cannot be guaranteed.

Although the absence of pre-funding doesnt imply a weak balance sheet, its presence probably implies a healthy one.

noh

Linton wrote: »

Isnt it being implied that H-L can only announce when they will pay tax rebates because they do pre-fund? If II's comment is correct the timing of payments from HMRC cannot be guaranteed.

Although the absence of pre-funding doesnt imply a weak balance sheet, its presence probably implies a healthy one.

II are probably giving out misinformation or are disorganised.

I don't think H-L pre fund.
It is more likely they make monthly interim claims for the tax relief.
It appears pension scheme administrators must make at least a yearly claim but can make interim claims which can be monthly or up to six months apart.

The timetable for the repayments is set out by HMRC therefore H-L can be fairly certain of when the payments will be made.

From
http://www.hmrc.gov.uk/manuals/rpsmmanual/RPSM05301020.htm

"Claims received by HMRC (PSS Nottingham) on or before the last working day of a calendar month, will be paid on the 21st of the following month. But where the 21st falls on a weekend or public holiday HMRC will make payment on the next working day.

Claims received after the last working day of a calendar month will be paid in the next following month."



https://www.gov.uk/pension-administrators-reclaim-tax-relief-using-relief-at-source



The form used by the pension administrator is here
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/390506/APSS105.pdf

dunstonh

weaker may have been a better word to use than weak. Although there have been concerns raised that a number of SIPP providers may not be as financially strong as desirable. Although that has been said for a number of years.

Other platforms may choose to give interest free loans but then incorporate the "interest" in their charges.

It is possible that a number factor it in. However, some of the more expensive DIY ones dont prefund. So, it does not always follow.