Paying £2880 into pension when retired

Willow1983

Hi everyone thanks for all the replies. Where-we-are just checking if I am better taking it out all at once (would I get emergency tax and need to fill out p55) or take it back out over a few months. Also with HL do I need to choose where to invest or do I just open a sipp with the £2880 and they do it for me? Apologies as you can guess I haven’t a clue when it comes to these things and appreciate any help. Thanks again Willow.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81973890#Comment_81973890

If you are planning on taking it out over a few months do you really want to have the risk that comes from investing it?

MallyGirl

if you leave it as cash they will pay you a bit of interest

Zanderman

https://forums.moneysavingexpert.com/discussion/comment/81973890#Comment_81973890

Just leave it uninvested, HL charge no fees for holding SIPP cash.

SVaz

Why on earth would it need to be invested?

Leave in cash, wait a couple of months for the relief to be added, draw the tax free 25% then draw the rest monthly over the remaining time, £720 ‘profit’ for 5 minutes work. Put it all straight into an ISA for an extra £144 at 4%.
With HL : you request your 25% tax free cash once the relief is added via an online form then you send them a secure message via your account requesting drawdown of £270 a month ( over 10 months - no tax.

where_are_we

https://forums.moneysavingexpert.com/discussion/comment/81973890#Comment_81973890

"SVaz" explains the monthly withdrawal method (to avoid paying tax) perfectly. The other option is to make a single UFPLS in March ie in the last month of the tax year. As others have said do not invest - keep it in cash.

Oranda

This may have been answered in this thread already, but it is now rather lengthy so please excuse me if it has.

I have taken tax free lump sums totalling £55K over the last 3 tax years (including £7.5K last tax year). Would paying in the £2880 in this tax year be seen as breaching recycling of tax free cash rules?

I am asking the question as I am finding the rules a little confusing, as maybe I fall foul of the additional contributions being £3600 gross and therefore being more than 30% of tax free cash I have received over the last 12 months.

So if it would be a case of breaching recycling rules on this basis. If this is the case, do I have to wait until after 12 months of my last £7.5K tax free cash payment, or would I have to wait longer before I can contribute more to my SIPP?

Willow1983

Thanks to everyone who has replied to my query 🙂 I think I will just take out full amount apart from £50 to keep account open and then just fill out a p55 form online. Many thanks Willow.

molerat

Is your husband a higher rate tax payer and if not do you transfer 10% of your tax allowance to him ?

IMO the best way to approach this pension, which gets all the first year admin out of the way, is to

1. Select your provider and pay in £2880 ASAP leaving the funds in cash.
2. As soon as the £2880 has cleared make a UFPLS for £1397. You will likely need to provide once only evidence of identity and bank details so this gets it all out of the way. This payment will have no tax deducted as it will paid using the emergency code of 1257LX and with £349.25 tax free leaves £1047.75 taxable which is below the £1048.26 allowance provided by that code. This will prompt HMRC to issue a code for future use which you can confirm is correct for your circumstances and get corrected if necessary.
3. Once the £720 has been added you can then work out when to take the remainder. With a code of either 1257 or 1130 (dependant on giving your 10% away) that would likely be June when your allowance exceeds the total £2660ish taxable you will be withdrawing over the 2 payments.
4. Next year HMRC will automatically issue a code for the pension, you pay in £2280 in April and do a one off UFPLS for £3600 in June with no tax deducted.
5. The exact month for 3) and 4) may need tweaking dependent on the actual code issued by HMRC - if you have savings interest and are not using your full allowance some is often allocated to that.

Willow1983

Thanks everyone for your advice very much appreciated. Willow