Paying £2880 into pension when retired

jamesd

Best to start a topic specific to her and the school but if it does turn out that an amount higher than pay has been paid in just let the SIPP provider know within six years plus an allowance for processing time of the end of the tax year. They will pay her a refund of excess contributions lump sum.

nxdmsandkaskdjaqd

jamesd wrote: »

Yes.

With HL one easy approach is to set up a regular monthly payment into a SIPP of 2880 / 12 take the 25% from the first year and set up a regular monthly payment to you of (3600 * 0.75 / 12) from the remaining 75% in the new crystallised SIPP account that they will create. The account wouldn't go below 1k and the regular payments give HMRC ample time to get them the right tax code and refund any excess tax.

I spoke to HL today trying to set up regularly monthly payments from the SIPP with the £3600, but they told me that I could NOT set up regular monthly payments. I could do one ad-hock payment and any new ad-hock requests would require a new application.

Am I correct in my assumption that for the above approach from James to work, the pension has to be crystallised?

jamesd

Yes.

At least with them. There are places that allow regular scheduled UFPLS.

SeeMe

Uglymug wrote: »

You pay in £2880 get £720 added making a total of £3600.
When you crystallise you get 25% tax free.
25% of £3600 is £900
You pay tax at your minimal rate on the other £2700.
My minimal rate is 20% so I pay £540 in tax.
So basically a 20% tax payer gets £720 added and £540 taken away.

So for someone retired on just 10k with a personal allowance of £11,500.
They would take £1500 from the other £2700, and only pay 20% tax on £1200?

where_are_we

That is correct - bear in mind that some SIPP providers require a minimum balance to avoid a closure charge eg HL minimum £1000 balance - so why not just take a taxable amount up to your Personal allowance and pay no tax at all ? This is what my OH and I do each year and keep the SIPP open and avoid any charges.

kidmugsy

Uglymug wrote: »

Anything wrong with my cunning plan?

Nope: lots of us have done it.

Tammykitty

I (Actually my mum) have just opened a virgin SIPP (3 April) with £2880.


Income is state pension only (£7.3k) a year


Does this mean that once the £720 gets added, I can withdraw it (via closing it) and then open a HL SIPP, and reinvest the £2,880 in it?


We are happy to keep a portion of the money in S&S also, so is it best to keep the £2,880 that will be withdrawn in Cash, and other cash that builds up in S&S?


Thanks for your advice


And then subject to leaving £1,000 in the account, I can withdraw and re-invest the same £2,880 each year and get the £750 top up?

jamesd

Virgin doesn't offer a SIPP, just a standard personal pension. Once the money is taken out the £2880 can be contributed to any personal pension, including Virgin or HL and including SIPPs.

xylophone

I could do one ad-hock payment

In pawn?:eek: Or bringing home the bacon?:)

SeeMe

where_are_we wrote: »

That is correct - bear in mind that some SIPP providers require a minimum balance to avoid a closure charge eg HL minimum £1000 balance - so why not just take a taxable amount up to your Personal allowance and pay no tax at all ? This is what my OH and I do each year and keep the SIPP open and avoid any charges.

So once the £720 is added to £2880 = £3600 you draw out £1500 which is up to the personal allowance tax free. My income 10k with a PA of £11,500.
So there is £2100 left in cash, does that mean you just add another £2880 the following year and repeat? and the cash left over just builds up in the sipp if you just want a cash sipp?