Paying £2880 into pension when retired

Nationwide8

Have just opened a SIPP with £2880 ( Hopefully !! )

But then I was thinking could I put more in ?

So my income ( Pension ) 2016-17= £7000 a year,so for tax year 16-17 I have £4000 unused PA ..

So could I have paid £4000 into the SIPP ?,HMRC adds £1000 = £5000 .. = 25 % which can be withdraw taxfree ( £1000 )
...leaves £4000 even if I withdrew it ( I wouldn't withdraw that amount of course ,need to leave possibly 1000 in ) it shouldn't be taxed because I'm still not exceeding my PA ie,£7000 +£4000 =£11000.

???? Have I missed something ???

AlanP_2

Nationwide8 wrote: »

Have just opened a SIPP with £2880 ( Hopefully !! )

But then I was thinking could I put more in ?

So my income ( Pension ) 2016-17= £7000 a year,so for tax year 16-17 I have £4000 unused PA ..

So could I have paid £4000 into the SIPP ?,HMRC adds £1000 = £5000 .. = 25 % which can be withdraw taxfree ( £1000 )
...leaves £4000 even if I withdrew it ( I wouldn't withdraw that amount of course ,need to leave possibly 1000 in ) it shouldn't be taxed because I'm still not exceeding my PA ie,£7000 +£4000 =£11000.

???? Have I missed something ???

You are limited to paying in up to your EARNED INCOME amount with a £40k maximum (although carry forward can add to that) or £2880 Net / £3600 Gross if you have NO EARNED INCOME.

In practice EARNED INCOME means wages / salary from employment so as your income is all pension you can't go over the 2880 /3600 figures.

Nationwide8

AlanP wrote: »

You are limited to paying in up to your EARNED INCOME amount with a £40k maximum (although carry forward can add to that) or £2880 Net / £3600 Gross if you have NO EARNED INCOME.

In practice EARNED INCOME means wages / salary from employment so as your income is all pension you can't go over the 2880 /3600 figures.

Thank you,thought I'd missed the "point" of the £2880 amount !!

Edit...does the £2880 figure change every tax year ?

where_are_we

The £2880net/£3600gross contribution figure has not changed for a number of tax years. It is very tax efficient if you limit your UFPLS withdrawals each tax year to bring you up to your personal tax allowance for that tax year. I am deferring my state pension [old scheme] because (a) the 10.4% guaranteed return is very good and (b) I can withdraw a UPFLS from my SIPP completely tax free because, together with my DB pension, they add up to my personal allowance. Don`t forget 25% of the UPFLS is tax free so its the 75% that you calculate to add to your other income to stay tax free.

matty17r

juju17 wrote: »

I have read and re-read this thread trying to get my head around this, and think i have understood correctly. I appreciate all the posts, as this is not an area I have known much about, so it has been very interesting.
I would appreciate someone confirming I have this correct please.
My only income is from my civil service pension which I received early due to ill health retirement.
So, I can put £2880 into the sipp, the HMRC add £720. When I am 55 next year, I can then take out 25% tax free each year, plus the difference between what I receive from my pension and the personal allowance of £11000....correct?
Thanks

You won't believe this juju but I too have been read and re-reading this thread with interest. My situation is very similar to yours so I too would be grateful for advice. I took out a very small annuity when I was 55 before the pensions reforms in the budget. This was a bad move but hindsight is a wonderful thing. Initially I thought I would be unable to open a sipp as this would be considered as recycling. I am now 59 and will also receive a small LGPS pension in May next year so can I also open a sipp. Any advice would be very much appreciated.

Nationwide8

Suspect only the SIPP provider might know this but has anyone any idea how long it takes HMRC to let the provider know your tax code ?
Would rather not be taxed straight off if i draw out more than the non taxable 25% for this tax year.

Can I also ask,what is UPFLS ?

saver861

matty17r wrote: »

I am now 59 and will also receive a small LGPS pension in May next year so can I also open a sipp. Any advice would be very much appreciated.

Anyone can open a SIPP - those 55 and over can draw from it.

If you are not working the most you can put in each year is £3600 - £2880 from you and £360 from HMRC. Recycling is a different thing.

Nationwide8 wrote: »

Suspect only the SIPP provider might know this but has anyone any idea how long it takes HMRC to let the provider know your tax code ?
Would rather not be taxed straight off if i draw out more than the non taxable 25% for this tax year.

Can I also ask,what is UPFLS ?

Uncrystallised Pension Fund Lump Sum. I think it was voted the worst piece of jargon in the financial sector.

HMRC usually takes about two months.

missile

Nationwide8 wrote: »

Suspect only the SIPP provider might know this but has anyone any idea how long it takes HMRC to let the provider know your tax code ?
Would rather not be taxed straight off if i draw out more than the non taxable 25% for this tax year.

Can I also ask,what is UPFLS ?

In my case HL was very efficient. HMRC was very prompt and topped up my investment and advised tax code < 30 days.

Uncrystallised Funds Pension Lump Sum (UFPLS) see here for details http://www.hl.co.uk/pensions/ufpls

juju17

Thanks to all posters for all the info and clarification, I have now got it!
DH and I both opened our sipps yesterday, very easy.
matty just go for it !

crocs

Thank you to everyone posting here – it’s an informative and enlightening (& slightly mind blowing) discussion.

Six years ago I retired early on a workplace pension of £45,000 pa.

I now earn between £2200 - £3000 each year in a low wage part time job, which is PAYE, so taxed at 40%.

I still have 6 years to go before I get my state pension.

I have savings.

I have never thought about putting anything in additional pensions. Reading this very interesting thread it seems I should be setting up a SIPP for myself. (Perhaps with AJBell or HL – paying in just £2880….or could I pay in more? )

Would any of you be able to offer me (or others in similar circumstances) advice or pointers?