Paying £2880 into pension when retired

AlwaysLearnin

peteduk said:

Hi,
First thank you to all who contribute here. I appreciate it very much having acted on the advice for my wife for the last 5 or so years. Unfortunately I wasn't aware of it before then.
My wife has a SIPP with HL which we manage by adding the £2880, and benefitting from the tax free allowance - she is a non taxpayer so we withdraw all but a token amount each year.
I understand her ability to do this ends at age 75 which she is, next October.
Are we able to continue in the 2023-24 tax year or was this tax year her last?
Thank you

She can contribute up to 75, so she can get another lot in in 23/24 whilst she's still 74.

dunstonh

I understand her ability to do this ends at age 75 which she is, next October.

Be on guard. Dont leave it too close to age 75 as many providers will have a cut off some weeks earlier than her 75th birthday.

Are we able to continue in the 2023-24 tax year or was this tax year her last?

Its a combination of age and tax year.  So, she can pay that last one between april and october but not after.

otb666

@peteduk I am at the start of my journey and  18 years before I am 75, As I am a non tax payer I am very interested in doing this SIPP with HL .  Do you pay the 240 in every month and then take 300 out every month.  Also when i draw a state pension i will be a tax payer so will the money added just be taken away again when I am 67 years old and collecting state pension. Also will i have to complete self assessments if I do a SIPP?

Dazed_and_C0nfused

otb666 said:

@peteduk I am at the start of my journey and  18 years before I am 75, As I am a non tax payer I am very interested in doing this SIPP with HL .  Do you pay the 240 in every month and then take 300 out every month.  Also when i draw a state pension i will be a tax payer so will the money added just be taken away again when I am 67 years old and collecting state pension. Also will i have to complete self assessments if I do a SIPP?

It's up to you how you fund it.  Some people will pay a bit monthly others will pay the full £2,880 in one go.  It's your choice. 

But for the current tax year a lump sum is going to be needed if you want to contribute £2,880.

You will need to check with HL what drawdown options they have, taking £300 each and every month may or may not be possible.

Also when i draw a state pension i will be a tax payer so will the money added just be taken away again when I am 67 years old and collecting state pension.

Not sure what you mean by this, being a taxpayer doesn't prevent you from taking money out of a pension.

Also will i have to complete self assessments if I do a SIPP?

Why do you think a Self Assessment return might be necessary?

vixen1500

Hiya, ended up with a £114 tax bill fir 21/22, and due to wage increase will get stung again 22/23.  Is it still worth paying into the SIPP each year now I'm having to pay tax?
Thanks 

Dazed_and_C0nfused

vixen1500 said:

Hiya, ended up with a £114 tax bill fir 21/22, and due to wage increase will get stung again 22/23.  Is it still worth paying into the SIPP each year now I'm having to pay tax?
Thanks 

It all depends on whether you think the effort is worth the reward.

If you are contributing £2,880 (net) and taking the whole of the gross contribution out it's still a 6.25% return.

£2,880 outlay for a total end return of £3,060.

peteduk

Thank you for the answers above. My plan will be to deposit the full £2880 in early April and then put 100% into drawdown after the Government top up. I will then withdraw gradually from September to ensure no monthly tax liability.

otb66: As it has been stated how you pay into the SIPP is up to you.
I have managed my wife's account so have simplified as much as I felt able as she is not computer literate and doesn't like forms to complete etc.
Therefore, being able to afford it, I paid in each year with 1 lump sum. Not sure how it is when you first apply now but HL now allow the deposit online by debit card. (Previously this wasn't possible so a cheque was needed).
There are 2 different withdrawal methods (Drawdown and UFPLS). Discussions in the history of this thread didn't teach me the advantage of 1 over the other for me so I used drawdown because it seemed simpler. After I went down that route most seemed to prefer UFPLS.

Maybe you should investigate what is best for your situation?

In the early years HL posted a document for you to request Drawdown. You completed and returned it. They sent back documentation as to what it could mean to your pension. You returned that acknowledging you understood. This is now online and much simpler.

I would request most of the SIPP's value to go into drawdown leaving a nominal amount to keep the account open / pay fees (Because my wife is not computer literate all her documentation is still paper based for her and a fee is charged; HL used to ask that £1000 was left in to keep the account open but don't do that now).

At some stage HL would receive a tax code from HMRC. This effectively allocates a tax free sum on income from HL for the year. It is allocated month by month on a cumulative basis.
I would then request payment from drawdown in September for 5 months worth of the tax free sum, then a further month's worth each following month until the drawdown value was complete.

I hope it is clearer for you than I found it at first (HL's process is better now), and as I hope you have seen, people on this thread are both very knowedgable and helpful. Hopefully they will also advise if I made an error or they can simplify any of the above

vixen1500

Dazed_and_C0nfused said:

vixen1500 said:

Hiya, ended up with a £114 tax bill fir 21/22, and due to wage increase will get stung again 22/23.  Is it still worth paying into the SIPP each year now I'm having to pay tax?
Thanks 

It all depends on whether you think the effort is worth the reward.

If you are contributing £2,880 (net) and taking the whole of the gross contribution out it's still a 6.25% return.

£2,880 outlay for a total end return of £3,060.

Thanks 
Less effort/work than needed for the yearly £60 from the Halifax 

Expotter

Hi,
Could anyone please help me with the following situation, if after making a first  UFPLS withdrawal of £1200 from a SIPP (£900 taxable, no tax deducted) and having been allocated a 1115NX tax code, does the X mean that any further UFPLS will also be treated as Month 1 i.e. not cumulative, so only 11150/12 would be treated as tax free? (I understand it could all be claimed back, just trying to avoid having to do that).
There's no other income for the year, other than savings interest which are below allowances.

Dazed_and_C0nfused

Expotter said:

Hi,
Could anyone please help me with the following situation, if after making a first  UFPLS withdrawal of £1200 from a SIPP (£900 taxable, no tax deducted) and having been allocated a 1115NX tax code, does the X mean that any further UFPLS will also be treated as Month 1 i.e. not cumulative, so only 11150/12 would be treated as tax free? (I understand it could all be claimed back, just trying to avoid having to do that).
There's no other income for the year, other than savings interest which are below allowances.

Yes, the tax code is 1115N.

The X signifies a non cumulative basis.

You can ask for the code to be issued on a cumulative basis if you wish.

But the X is dropped at 5 April 2023 and it automatically becomes cumulative from the start of the 2023:24 tax year anyway (or a different code will be calculated.  On a cumulative basis).

Interest uses any spare Personal Allowance before the savings starter and nil rate bands can be used.