Paying £2880 into pension when retired

missile

Lincoln_Imp wrote: »

Can i really ..Thought it was classed as pension recycling ?
Anyway might have no need (Or enough money) if we can put 12k into my wife`s

Read the whole thread there are several who have done it.

I would suggest you consider whether that is the most tax efficient for you and your wife..

hogweed

Sorry to jump chaotically in again, but chaotically is the only way I know how to behave around money… so I opened my SIPP with HL, and have just received the tax relief from the government.

If I withdraw that, does it count as taxable income as I’m still working? Do I need to wait till I retire to avoid this, as in the first couple of years of my retirement I won’t have any other income of any kind, except savings)?

Thanks

dunstonh

hogweed wrote: »

Sorry to jump chaotically in again, but chaotically is the only way I know how to behave around money… so I opened my SIPP with HL, and have just received the tax relief from the government.

If I withdraw that, does it count as taxable income as I’m still working? Do I need to wait till I retire to avoid this, as in the first couple of years of my retirement I won’t have any other income of any kind, except savings)?

Thanks

The 75% element is classed as taxable income.

hogweed

dunstonh wrote: »

The 75% element is classed as taxable income.

Thanks so much... you mean the money I originally put in?

So even though I'm working now, I could withdraw the tax relief portion I've just received (I guess you'd call that the 25% element?) without paying tax on it?

xylophone

Thanks so much... you mean the money I originally put in?

No.

Let's suppose you contributed £2880 and have received £720 TR.

You can take 25% of £3660 as the tax free Pension Commencement Lump Sum. The balance, (if drawn), is taxable as income in the tax year of receipt.

hogweed

Aaah right. I originally invested £13,500; received my tax free £3375; total now £16,875.

So now I can withdraw £4218, tax free, even though I’m still earning, and leave the balance till a year when I have no other earnings… excellent


Thanks again!

SallyG

The whole deal looks too good to be true so..........
Is this daft?
If you're doing pension capped drawdown is it do-able/logical/legal to take £2880 from your drawdown fund or from , say, a less than inflation % cash ISA and re-invest that in the existing drawdown fund to get the government tax bounty, buy units with it and leave them there?
I took max available drawdown in the early days to stash cash/house repairs etc. - now I take only enough to stay under the tax threshold - the pension fund's doing better than all other savings. The tax bounty would cover my pension fund fees and the remainder would rebuild the number of units in the fund [depleted in the early days] now that I feel more secure.

Could I do this via my drawdown pension provider [SW] into my existing drawdown fund?

jamesd

hogweed wrote: »

Aaah right. I originally invested £13,500; received my tax free £3375; total now £16,875.

So now I can withdraw £4218, tax free, even though I’m still earning, and leave the balance till a year when I have no other earnings… excellent

Yes and yes, it is.

Just don't take out any of the taxable part because if you do that your annual allowance for new pension contributions will be cut from £40k to £4k a year, it's temporarily still at £10k instead of £4k. That's be painful when still earning and maybe trying to put your whole gross pay as the gross amount ending up in the pension.

jamesd

SallyG wrote: »

If you're doing pension capped drawdown is it do-able/logical/legal to take £2880 from your drawdown fund or from , say, a less than inflation % cash ISA and re-invest that in the existing drawdown fund to get the government tax bounty, buy units with it and leave them there?

Yes, but do use a flexible cash ISA. Those let you take the money out and pay it back in later in the tax year without it counting as newly subscribed money. You could replenish that at least partly from the tax free lump sum money. Though the USA annual allowance doesn't really matter at the sort of amounts involved for you.

Not particularly logical to have a cash ISA unless you want no risk because there will soon be ISA P2P where you can expect more than 10% interest after allowing a couple of percent for bad debt. That's much more lucrative than say corporate bonds inside a pension or a current or savings account.

SeeMe

As someone who is retired and opening a sipp just for cash, £2880 deposit which will be upped buy £720.If i closed it say 12 months later does the money get taxed? how does it work because its a pension and not a savings account.
I am a none tax payer.