Gain 6.25% by reinvesting drawdown

srcandas

jamesd wrote: »

You would be allowed to give money to someone else so they could make a pension contribution. Maybe a spouse.

James just to confirm my HL SIPP is in drawdown (about £5000 a year GAD for last 2 years). So after 6 April I can stop the current payments and just suck out £20000 immediately (well in days). HL will retain £4000 in tax but as I only have in addition £5000 of Annuity income I'll get a bit of that back later.

Then my wife can pay £15000 (her annual salary £7500 being anticipated plus unused allowance in last two years (??)) into her SIPP late April. Then she can in May take out the 25% tax free sum (she needs to do it this year as next year we will be in Spain and they would tax it :eek:). And in subsequent years she could still invest £3600 (or up to her UK salary) if she remains a UK tax payer (as I understand it being overseas and not a UK tax payer removes the SIPP contribution tax relief).

Much appreciate heads up if I can't do that :beer: And tx everyone for the info so gfar. I'm sure it is helping many :T

jamesd

Your wife could only pay in £7500 gross because that's all the earned income she has.

The £40,000/£10,000 cap only applies if it's lower than earned income. It doesn't let you go over earned income. No carry-forward or earned income either, just this allowance.

Yes after 6 April you can take out that £20,000 immediately, barring delays in HL's systems if there's high demand. Note that HL has a charge if all money is taken out within a year so you might want to leave a Pound in the account.

srcandas

Many tx James. OK I better go borrow £4000 for a week to use all of her salary this year. Tx for the HL delay thought. I'll make sure I get my request in first thing in the new tax year. I've already moved sufficient to cash within my SIPP.

ok I get the salary limit. I guess I wanted my bread buttered both sides

kidmugsy

srcandas wrote: »

I'll make sure I get my request in first thing in the new tax year. I've already moved sufficient to cash within my SIPP.

Give them a buzz: they may be prepared to accept an instruction now to pay out late April. (Do I remember that the 28th is their usual payment day?)

srcandas

kidmugsy wrote: »

Give them a buzz: they may be prepared to accept an instruction now to pay out late April. (Do I remember that the 28th is their usual payment day?)

Just in case anyone else is waiting on this: Gave HL a call. They said the form for converting a GAD drawdown SIPP to the new flexible SIPP wasn't ready but they added me to a list and would send as soon as.

They expected the change to take 2 days max (the guy thought complete by the 8th April as 6th is a bank holiday). They offered money can be extracted just like with an ISA - virtually instant. Took 24 hours for me to extract money from a HL ISA just last week.

So all looks good and straight forward. Cheers :cool: