SIPP in drawdown

ognum

Have SIPP in drawdown, fully crystallised, life time allowance agreed, tax free lump sum taken.

Investments mean pension breaches lifetime allowance (minus lump sum), what are the implications? Will there be additional tax to pay? When?

kidmugsy

Could a large market slump take you below the LTA? If so that's the time to take the money as that's when it'll be tested against the LTA.

xylophone

https://www.gov.uk/tax-on-your-private-pension/lifetime-allowance

ognum

xylophone wrote: »

https://www.gov.uk/tax-on-your-private-pension/lifetime-allowance

Thanks,I have read through this but it doesn't answer my questions.

What I would like to know is if my LTA has been breached by maybe £100k when I take my next pension payment (I take one a year) to the top of the 20% tax threshold will I have additional tax to pay or can the extra amount stay in the SIPP untouched and no tax paid.

Thanks

HappyHarry

The SIPP was tested against the lifetime allowance when it was fully crystallised. It will not be tested again.

Your remaining funds can now grow as much as they like.

jamesd

Your lifetime allowance percentage used is checked when you crystallised the benefits. What happens to the investments in the future makes no difference until age 75 when there is another check to see whether the growth in the value actually in the pot at that time is higher than it was at crystallisation. The amount over the original is added to the percentage of lifetime allowance used. If it's less there's no charge. Avoiding the age 75 check tends to be easy since all you have to do is take out enough money so that the value drops instead of increasing.

Invest with good fortune and increase your crystallised pot value to ten million Pounds and you'll have no lifetime allowance charge to pay until you get to age 75.

ognum

jamesd wrote: »

Your lifetime allowance percentage used is checked when you crystallised the benefits. What happens to the investments in the future makes no difference until age 75 when there is another check to see whether the growth in the value actually in the pot at that time is higher than it was at crystallisation. The amount over the original is added to the percentage of lifetime allowance used. If it's less there's no charge. Avoiding the age 75 check tends to be easy since all you have to do is take out enough money so that the value drops instead of increasing.

Invest with good fortune and increase your crystallised pot value to ten million Pounds and you'll have no lifetime allowance charge to pay until you get to age 75.

Thanks for a comprehensive reply, very useful, ten million will be my aim then!

ognum

HappyHarry wrote: »

The SIPP was tested against the lifetime allowance when it was fully crystallised. It will not be tested again.

Your remaining funds can now grow as much as they like.

Thank you, very useful

Freecall

HappyHarry wrote: »

Your remaining funds can now grow as much as they like.

....... yes please!