Paying £2880 into pension when retired

Audaxer

akh43 said:

I am finally in a position to do this for the first time, but confused as to where to start.  I started to read through the 106 pages of comments, but as some of them are from 2017 I am not sure if the advice or rules have since changed and don't want to do the wrong thing.

I am aged 61 and my only income is a works DB pension of £13,225.80, so I pay tax of £12 a month.

Any pointers would be appreciated as I have gone on the HL website but have no idea where to start.  Thanks

A couple of months after you contribute £2,880, tax relief of £720 will be added. You could then draw out £2,600 by UFPLS as you need to leave £1,000 in to keep the account open. 25% of the £2,600 will be tax free. As your DB pension already means you are over your personal tax allowance, that means that you will have tax deducted from the remaining 75% of the withdrawal. In subsequent years, with the £1,000 left in to keep the SIPP open, you can pay in £2,880 and after tax relief is added withdraw £3,600 of which 75% will again be taxable.

Rob749

The only problem so to speak, is that HL require you to leave £1000 in the account, otherwise they close it, not sure if that applies after 12 months though. You would then wait for the next tax year, do the same again, when you could draw the whole amount and still leave the £1000 there. Also if you do draw the whole amount, you will have to pay tax on £2700, which is the remainder after the tax free amount is deducted, this will leave you £3060 as a basic rate tax payer, a gain of £180 on your original contribution. I think that's how it works, I'm sure someone will correct me if I am wrong here. Alternatively find a pension provider that doesn't require £1000 in account to keep it open.

Rob749

Sorry Audaxer, didn't see your reply from this morning, before I posted mine. I'll have to get new glasses !!

jamesd

Audaxer said:
 you need to leave £1,000 in to keep the account open

Rob749 said:

The only problem so to speak, is that HL require you to leave £1000 in the account, otherwise they close it

A few months ago I used UFPLS and PCLS with drawdown and asked HL to leave the minimum in the uncrystallised account to keep it open for my monthly contributions and possible future transfers in. They left £1 uncrystallised.

I don't expect them to close an uncrystallised account with non-trivial direct debit, nor a drawdown one with either £1k or a few months worth of regular payment money in it. In theory they could but I no longer think it's worth doing more than I just described.

molerat said:

They have slightly ignored the withdrawal amount requested and left £1001 in the account, not sure why but not concerned.

The difference between my £1 and that £1001 might be my ongoing DD.

Rob749 said:

Sorry Audaxer, didn't see your reply from this morning, before I posted mine. I'll have to get new glasses !!

A duplicate or three can be a good thing because it can help to confirm to the questioner that consistent answers are right.

vixen1500

Just applied to take £3600 out of my SIPP.
Would I be right in thinking that £900 is tax free.  The remaining £2,700 would be added to my other income for the year and if this totals more than £12,500 I will have to pay tax @ 20% on anything over £12,,500.
Thanks in advance 

Dazed_and_C0nfused

vixen1500 said:

Just applied to take £3600 out of my SIPP.
Would I be right in thinking that £900 is tax free.  The remaining £2,700 would be added to my other income for the year and if this totals more than £12,500 I will have to pay tax @ 20% on anything over £12,,500.
Thanks in advance 

Depends what method you have used to take the money out if your SIPP.

But it is possible however if you have applied for Marriage Allowance then your Personal Allowance will only be £11,250.

molerat

Yes .......... but ........ the pension provider, unless they already have a tax code for you, will tax the payment at 1250M1 which will result in £331.40 tax being deducted from the payment so you will need either reclaim or pay more tax on it as appropriate.

vixen1500

Dazed_and_C0nfused said:

vixen1500 said:

Just applied to take £3600 out of my SIPP.
Would I be right in thinking that £900 is tax free.  The remaining £2,700 would be added to my other income for the year and if this totals more than £12,500 I will have to pay tax @ 20% on anything over £12,,500.
Thanks in advance 

Depends what method you have used to take the money out if your SIPP.

But it is possible however if you have applied for Marriage Allowance then your Personal Allowance will only be £11,250.

Using UFPLS.
Not applied for the marriage allowance 

Dazed_and_C0nfused

vixen1500 said:

Dazed_and_C0nfused said:

vixen1500 said:

Just applied to take £3600 out of my SIPP.
Would I be right in thinking that £900 is tax free.  The remaining £2,700 would be added to my other income for the year and if this totals more than £12,500 I will have to pay tax @ 20% on anything over £12,,500.
Thanks in advance 

Depends what method you have used to take the money out if your SIPP.

But it is possible however if you have applied for Marriage Allowance then your Personal Allowance will only be £11,250.

Using UFPLS.
Not applied for the marriage allowance 

Then you will have £2,700 taxable income and any earned income or pension income over £12,500 would indeed be taxed at 20% (unless you are Scottish resident for tax purposes).

vixen1500

molerat said:

Yes .......... but ........ the pension provider, unless they already have a tax code for you, will tax the payment at 1250M1 which will result in £331.40 tax being deducted from the payment so you will need either reclaim or pay more tax on it as appropriate.

Did this last year and they deducted tax, but it was repaid once I submitted my tax return.  Just realised this year my total income looks like it will be over the £12,500 tax allowance