Redundancy £91k June-SIPP & tax relief & drawdown options

philng

I am aged 51 & due to take VR at end of June. Will receive a sum of around £91k which I am aware the first £30k is tax free.
My intention is to open a SIPP with sum of around £50k (I have spare capacity in the last 3 years) & then drawdown over 5 years age 55 to 60 within my annual tax free allowance before drawing my DB Company pension at age 60.
My earnings prior to receipt of VR as at end of June will be around £13k in total & my current tax code is 565.
Total taxable income as at 30/6 will be:
£13000
£61000

Total £74000

How much can I pay in to my SIPP in order to receive the max 40% tax relief?

philng

Anyone able to help on this?

kidmugsy

philng wrote: »

I am aged 51 & due to take VR at end of June. Will receive a sum of around £91k which I am aware the first £30k is tax free.
My intention is to open a SIPP with sum of around £50k (I have spare capacity in the last 3 years) & then drawdown over 5 years age 55 to 60 within my annual tax free allowance before drawing my DB Company pension at age 60.
My earnings prior to receipt of VR as at end of June will be around £13k in total & my current tax code is 565.
Total taxable income as at 30/6 will be:
£13000
£61000

Total £74000

How much can I pay in to my SIPP in order to receive the max 40% tax relief?

Subtract the £43k threshold from £74k = £31k gross. Multiply by 0.8 = £25k net contribution. Half the tax relief is claimed by your provider and added to your pension: the other half you have to claim yourself from hmrc. Apparently phoning at 8:00 a.m. on a Saturday morning can do the trick.

Presumably you'll live off the £30k until 6/4/17 before drawing income from your pension?

Come to think of it, if you're going to be a O% taxpayer in 17/18 and thereafter, you could always add more to the pension so that you avoid 20% tax too. Why not do the sums on that and stick the result up here for us to coo over?

philng

Yes I have significant other savings & investments.
The plan is to draw down from my SIPP say £10k per year from age 55 to 60 (4 years away) thus avoiding tax before my final salary pension kicks in at £21k pa from age 60.
Wife is age 56 and is also taking VR and we intend to draw down her pension pot in stages from next tax year over an 8 year period until she receives her final salary pension at £7k pa & slightly later statre pension.
Hoping to be able to live on tax free income from ISA share investments/£11k personal allowance/£5k dividend allowance & £1k savings interest allowance until final salary pensions kick in.
Thats the plan anyway.
Does my tax code at 565 affect the 40% amount I can pay in to my SIP?