£2880>£3600

parcival

I must be lucky because my £2880 with Virgin is now worth over £100 more.......

uk1

Some of that must be my wife's.

Give it back.

Jeff

uk1

Just posting this information about the timing of tax relief in case anyone else is interested.

Jeff

Please note, it can take up to 12 weeks after your investment for us to receive tax relief from the HM Revenue and Customs. If you contribute into your plan before the 6th of each month, we should receive your tax relief on or after the 21st of the following month. But if we receive your payment on or after the 6th, your tax relief is invested up to 12 weeks after the date you made your payment.

If you have any questions, please call us on 03456 10 20 30. Our lines are open from 8am to 9pm, Monday to Friday and 9am to 6pm on Saturdays. Kind Regards Andrew Stead Investments and Pensions Manager

harz99

missile wrote: »

I set up HL SIPP prior to April 5. On recommendation from this site (jamesd), I set up to withdraw 25% tax free and the balance as 12 monthly payments. Thus avoiding charge for closing the account within 12 months. Works well for me and I intend doing the same prior to April 5 next year.


It is easy to do online. There is a charge if you close account within 12 months, details are here > www.hl.co.uk

Doing exactly as above for my wife who only receives State Pension and some savings interest.


My question is, if you put the maximum lump sum of £2880 in and leave in cash, do you set the 25% withdrawal and monthly payments out at the time you set up and fund the account, or wait until the tax rebate has been paid in and then set up the 25% and monthly withdrawals?

eric100

Really useful thread as I didn't know about this and it may be useful for my wife who retires at the end of the year and wont be paying any tax. Could someone clarify a couple of things for me please as I'm not certain I understand the relevance of all the comments:

- why would you close it at the end of each year and open another, can't you just keet it open?
- infact, couldn't I just leave it in for a couple of years (if I didn't need access) and then take the 25% of that sum tax free?
- I take it this is just another personal pension/SIPP arrangement?
- I notice James said that Virgin don't charge but their fees seem to be 1%, was this some other charge?

Thanks

bigadaj

You can leave it in, it's just that most people would want to take their profits in an annual basis.

Virgin are frequently quoted as an expensive provider for normal pensions, as the 1% on total funds is very expensive when comoared to other options for larger sums.

However 1% on the sums you are talking about is low as an amount, and there are no closure charges which others providers might invoke.

So for virgin the total cost for the sums talked about is only £30 which is pretty good.

Over62

bigadaj wrote: »

You can leave it in, it's just that most people would want to take their profits in an annual basis.

Virgin are frequently quoted as an expensive provider for normal pensions, as the 1% on total funds is very expensive when comoared to other options for larger sums.

However 1% on the sums you are talking about is low as an amount, and there are no closure charges which others providers might invoke.

So for virgin the total cost for the sums talked about is only £30 which is pretty good.

With Hargreaves Lansdown, you need to leave in £1000 to keep it open. They charge £245+VAT to close the account within a year of it being opened, but only £25+VAT after a year.

AnotherJoe

eric100 wrote: »

Really useful thread as I didn't know about this and it may be useful for my wife who retires at the end of the year and wont be paying any tax. Could someone clarify a couple of things for me please as I'm not certain I understand the relevance of all the comments:

- why would you close it at the end of each year and open another, can't you just keep it open? yes you can and unless you are in desperate need of all the money immediately that seems easiest all round.
- infact, couldn't I just leave it in for a couple of years (if I didn't need access) and then take the 25% of that sum tax free? You could take all of it tax free as long as its below the personal tax allowance for that year. Beware taking it out as a lump sum when they may think thats a monthly amount and tax according. Better to get the appropriate tax code first.
- I take it this is just another personal pension/SIPP arrangement? Yep.

HTH Joe ....

jamesd

harz99 wrote: »

My question is, if you put the maximum lump sum of £2880 in and leave in cash, do you set the 25% withdrawal and monthly payments out at the time you set up and fund the account, or wait until the tax rebate has been paid in and then set up the 25% and monthly withdrawals?

You can take 25% of the 2880 immediately if you like. That portion will be moved to your drawdown account. When the tax relief arrives it'll go into the uncrystallised account and you can take 25% from that and the remainder goes into drawdown.

It's somewhat tidier to wait. That way there will be a bit of excess money in the account due to the roughly two month delay so you will not have to worry about exact timings.

For anyone who missed the initial description, the idea is take the lump sum, take the regular income and have a direct debit with the ongoing payments each month. So it pretty much looks after itself except for the tax free lump sum parts. And since the income is regular HMRC has plenty of time to get a correct tax code to the pension provider for their PAYE use.

It's a little inefficient because the money is in cash (I assume you'd want to use cash) so you're losing a bit of savings interest as the price for low hassle.

jamesd

eric100 wrote: »

- why would you close it at the end of each year and open another, can't you just keet it open?
- infact, couldn't I just leave it in for a couple of years (if I didn't need access) and then take the 25% of that sum tax free?
- I take it this is just another personal pension/SIPP arrangement?
- I notice James said that Virgin don't charge but their fees seem to be 1%, was this some other charge?

Some providers might close the account, if they don't you can keep it open. Yes, you could leave it for many years if you didn't need the money. Yes, it's just a personal pension. Virgin don't charge a fee for taking the money but they do charge 1% a year, taken pro-rata daily, for the FTSE tracker fund that the money will be in. Since the money won't be around for long the cost is low compared to fixed fees for taking money that some places charge. Perhaps three months of 1% a year on £2880, so about £6.65. One disadvantage is that it is invested in the FTSE tracker so the value can go up or down. So the regular payments via HL is somewhat safer because the money can be left in cash.