Paying £2880 into pension when retired

otb666

i have opened a HL Sipp put 2880 in it and have to wait until 21/4/23 for the tax relief, then take out smallest amount to allow tax code to be sorted and then withdraw the rest apart from small amount. Then repeat next year. My tax code is currently 1131N and taxable pay to date (my pension) is 4308.17 Have I missed anything?

molerat

This year's income is irrelevant. You are going to be withdrawing this in the 2023-24 tax year.  What is your predicted income for next year ?  You may be able to put another £2880 in after 6th April and take both out with no tax to pay.  If you want to keep the SIPP rolling rather than opening a new one each year you need to keep a minimum of £50 in it. Even with a tax code you are likely to have to wait a few months to be able to draw the whole lot out in one go.

otb666

@molerat Thanks for replying my pension is 5500pa and I have given hubby some of my tax allowance the married allowance hence the 1131N. tax code, i was hoping to recycle the same 2880 for 2023-24 tax year.  I did not think you can get more than 3600 per year? I dont work and my pension and this is my only income

Dazed_and_C0nfused

otb666 said:

@molerat Thanks for replying my pension is 5500pa and I have given hubby some of my tax allowance the married allowance hence the 1131N. tax code, i was hoping to recycle the same 2880 for 2023-24 tax year.  I did not think you can get more than 3600 per year? I dont work and my pension and this is my only income

But you will be putting £3,600 (gross) in this tax year and then again next tax year.

So have £7,200 available to take out in 2023:24 (£1,800 TFLS and £5,400 taxable).

molerat

otb666 said:

@molerat Thanks for replying my pension is 5500pa and I have given hubby some of my tax allowance the married allowance hence the 1131N. tax code, i was hoping to recycle the same 2880 for 2023-24 tax year.  I did not think you can get more than 3600 per year? I dont work and my pension and this is my only income

You can recycle it but you will be able to get most of it out again in the same tax year. You will be getting 1.7% interest on it whilst it is sitting in the SIPP.

otb666

@molerat @Dazed_and_C0nfused I would like to  wait for the tax relief to be applied 21/4/23 then withdraw small amount then remainder and put in back in again before 1/4/24 as I dont want to put in 5760 until I see it work if you know what I mean.  As always extremely grateful for both your comments and hold you both in the highest regard I will still get the (£1,800 TFLS and £5,400 taxable) in the same tax year this way wont I?

Dazed_and_C0nfused

otb666 said:

@molerat @Dazed_and_C0nfused I would like to  wait for the tax relief to be applied 21/4/23 then withdraw small amount then remainder and put in back in again before 1/4/24 as I dont want to put in 5760 until I see it work if you know what I mean.  As always extremely grateful for both your comments and hold you both in the highest regard I will still get the (£1,800 TFLS and £5,400 taxable) in the same tax year this way wont I?

If I've understood you correctly you are going to do this,

2022:23
Contribute £3,600 (gross)
Withdraw £0

2023:24
Contribute £3,600 (gross)
Withdraw £7,200 (split £1,800 TFLS and £5,400 taxable pension)

After that you will be limited to adding and withdrawing £3,600 each tax year (from 2024:25 onwards).

If you take a very small first payment you will probably need to update your estimated pension amount on your Personal Tax Account as you won't generate the correct tax code for the SIPP/personal pension.  

For example if you take £10 in April that looks like £120/year so the tax code will be 1T.  When you want as much of your spare allowances as possible at the SIPP/personal pension.

So taking £1048 taxable income as the first payment might be the way to go to avoid added complications.  That way you get all your spare tax code allowances at your new SIPP/personal pension.

Or just wait for the low tax code and update things on your Personal Tax Account and get a revised tax code.

otb666

@Dazed_and_C0nfused
2022:23
Contribute £2880 
Withdraw £3600

2023:24
Contribute £2880
Withdraw £3600 
I only wanted to avoid paying tax and reclaiming it, so I thought by withdrawing a small amount first would allow HMRC to advice correct tax code to HL rather than be taxed on BR. I have never used A Personal Tax account and never done self assessment.  I have always been an employer before i got made redundant in jan 22 at 55.  Can I  withdraw 500pm after 21/4/23 then in November 23 make 2880 payment and withdraw the rest.

I just want to avoid paying tax and then waiting for end of year to have it paid back Also do not want to pay 2880 twice Before accessing money out first.

VXman

otb666 said:

I just want to avoid paying tax and then waiting for end of year to have it paid back Also do not want to pay 2880 twice Before accessing money out first.

 There is a method for reclaiming tax before the end of the tax year.

https://www.gov.uk/claim-tax-refund

harz99

Joining in to ask a related question - have the £2880/3600 limits been increased or altered after this week's 2023 budget please?