Drawing State Pension Early

caveman38

Thinking about this overnight and have another couple of questions if you would indulge me. As you can see this is the first time I've thought about this idea.
If you pay into this SIPP or PP for say 5 years and accumulate £40K. At 66 she takes her tax free £10K. Can she then take say £2K a year for 15 years to keep her tax free with personal allowance, or is she obliged to have a lifetime drawdown.
Can you have separate SIPP's. ie one with cash, another with P2P or S&S etc. Or do you have to find a provider that will umbrella all the money and invest as per your instructions.
Can you claim in tax relief money you haven't paid in tax that tax year. For example if she invests £15K does she pay 12 and claim 3 from IR although that tax year she only paid £1,000 in tax. Or can she only invest £5K to claim that £1,000 and pay £4 herself.
Thanks

Linton

caveman38 wrote: »

....
A - If you pay into this SIPP or PP for say 5 years and accumulate £40K. At 66 she takes her tax free £10K. Can she then take say £2K a year for 15 years to keep her tax free with personal allowance, or is she obliged to have a lifetime drawdown.
B - Can you have separate SIPP's. ie one with cash, another with P2P or S&S etc. Or do you have to find a provider that will umbrella all the money and invest as per your instructions.
C - Can you claim in tax relief money you haven't paid in tax that tax year. For example if she invests £15K does she pay 12 and claim 3 from IR although that tax year she only paid £1,000 in tax. Or can she only invest £5K to claim that £1,000 and pay £4 herself.
Thanks

A - you can take as much or as little as you want at any time from a SIPP in drawdown. You may wish to check the charges.

B - you can have as many SIPPs as you want. The accounts I use can hold cash as well as shares and funds and I would expect all others do. Though note that you will get no more than standard commercial interest rates for cash - ie virtually zero.

At the moment P2P is different and I dont know of any SIPP providers that support both P2P and other investments. P2P SIPPs have only become available very recently and things may well change in the future.

C - Full basic rate tax relief is claimed by the pension company. So she can pay in £12K net and is credited with £15K, even though she may not be liable to £3K tax.

atush

Yes, she can take the TFLS and then draw up to her PA each year.

You can have one sipp and hold cash,and other investments within it. You can hold P2P in some isas. You could have a sipp and an isa with the same provider. Or you can have multiple sipps (but this means more in charges than having one invested in different things)

caveman38

Thanks for the answers - very informative.
Since she has only 2 years to work and would like to maximise all benefits in that time (although she can still pay in the £2,880) . I am aware that you cannot claim allowances for previous years but if you are dealing with a lump sum. Are you only able to do it once your gross pay is known ie. at the end of the tax year. If that is the case then why can you not do a SIPP for the previous year. Or when in the tax year do you make the deposit (if a lump sum)
Once you make the initial withdrawal can you still make deposits from other funds for the tax benefit.
As xylophone mentioned that even if the SIPP is for cash, then the paltry rates maybe are not so important as getting the tax benefit. Which over a short time will be a plus in itself.
HL seems to get a mention a lot around here but are there any other recommendations that may have rates for cash deposits - which HL don't have ATM.

jem16

caveman38 wrote: »

I am aware that you cannot claim allowances for previous years

You can use Carry Forward to contribute more than the annual allowance of £40k but your contributions will only earn tax relief on up to 100% of your earnings.

but if you are dealing with a lump sum. Are you only able to do it once your gross pay is known ie. at the end of the tax year. If that is the case then why can you not do a SIPP for the previous year. Or when in the tax year do you make the deposit (if a lump sum)

You need to work out what your income will be and make your contribution before the end of the tax year.

Once you make the initial withdrawal can you still make deposits from other funds for the tax benefit.

Yes although your annual limit will go down if you actually take an income from the SIPP.