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SIPPS and Cash ISAs
citrilla
Posts: 5 Forumite
If I transfer funds annually from my SIPP into my cash ISA and then withdraw from the cash ISA can I avoid income tax?
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Comments
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No you cant. The withdrawal from the SIPP will be added to your income for income tax purposes with the exception of the 25% tax free cash payment (whether you take that up front or as part of the annual withdrawal).
Taking money out of a tax free pension, paying tax and putting it in a cash ISA doesnt seem like a good idea for most people.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
So any transfer out of a SIPP directly into a cash ISA will be treated as income once the 25% tax free sum has been taken out and will be subject to income tax--have I got that correct?0
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Yes you have. The tax free lump sum could go into ISA's but you would only be moving from one pot to another, possible in the same funds?I'm a retired IFA who specialised for many years in Inheritance Tax, Wills and Trusts. I cannot offer advice now, but my comments here and on Legal Beagles as Sam101 are just meant to be helpful. Do ask questions from the Members who are here to help.0
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Thanks for the info. My financial advisor seemed to think it was possible which worries me, particularly as I suggested it to him. I wondered why he had not given me the idea previously.0
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If you are a non earner, then your personal allowance is available to use against the pension.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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No I am a basic rate payer0
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Worrying that your adviser told you this if he knew you were a basic rate tax payer.0
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Confused--my IFA says it can be done. Can transfer funds from my SIPP each year put them in cash ISA then withdraw from the ISA and avoid paying any income tax. If this is possible why is it not mentioned as a strategy by the experts?0
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Its simply not possible to do this. Your advisor is talking complete b*ll*cks and is clearly unfit to be in business. Alternatively you may have misunderstood his advice. Either way I recommend you cut all ties with him and get yourself as far away as possible.
good luck0 -
You have a SIPP. You are a standard rate tax payer.
You wish to put the SIPP into drawdown under the new rules.
See
http://www.metlife.co.uk/uk/Documents/Technical_Library/1677-Pensions_flexibility_from_6_April_2015-Technical_guide.pdf
http://adviser.royallondon.com/articles/updates/2015/january/fad-versus-ufpls/0
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