SIPP - Too good to be true?

Skibunny40

That's a very, very good point JamesD - she has no plans to stop working as far as I know, so that could cause a problem.

jamesd

She does have a bit of margin between higher rate income tax and her post-pension contribution income at the moment. Some risk there is that she might be earning more or the threshold of higher rate income tax might change adversely. So she couldn't take out much of the taxable 75% in one tax year unless she was taking it to make new pension contributions. That's legal and could pay if she's in a salary sacrifice scheme at work and hence also saving NI.

Another issue with taking any of the taxable 75% is that her money purchase annual allowance will be reduced from £40,000 to £10,000 gross a year and carry forward for her will be banned for life. Since she's now paying in £12,000 a year that would have a negative effect on her plans. A possible workaround for that is taking 25% tax free lump sum from another pension pot so the net amount she has left in pensions hasn't changed.