Paying £2880 into pension when retired

gocat

Applied for a sipp drawdown thingie a few weeks ago. Expected to get my 25% Monday. So could I then pay in £2880 after getting that and then £2880 in the new tax year and get 2 lots of tax relief ? Then able to withdraw that as long as I leave in £1000.
Just trying to make sense of above posts

tia

jerrysimon

gocat wrote: »

Applied for a sipp drawdown thingie a few weeks ago. Expected to get my 25% Monday. So could I then pay in £2880 after getting that and then £2880 in the new tax year and get 2 lots of tax relief ? Then able to withdraw that as long as I leave in £1000.
Just trying to make sense of above posts

tia

Assuming you did not put any money into your SIPP (that exceeeded your allowance) in 2018/19, yes.

I have just put in £2880 for this year 2018/19 and will put another ££2880 in after April 5th (2019/20) so will have two lots of £720 to collect in May/June sometime, leaving £1k in as you say.

Of course if you are paying tax on any income in 2019/20 then you will pay tax on anything over £25% of your SIPP draw down.

I pay tax on my PS pension (I count myself lucky I do) which is why the SIPP is in my wife's name as she does not earn enough to pay tax.

Bearingup

Can I just ask for an opinion on the following for my sister:

Aged 55

In the last 12 months, she has started to take 2 x pensions:

1st Pension - Defined Contribution where she took 25% PCLS (£42,911) in July 2018 & gets a monthly pension payment of £536.40

2nd Pension - Was defined contribution but moved to Hargreaves Lansdown SIPP in January 2019 where she took 25% PCLS (£3267.00) & the balance of the pension (Approx £10,000) is in monthly drawdown.

She no longer works, so these 2 pensions are her only income. She has not contributed to any pension since March 2016.

Just looking at the pension recycling rules:

• the individual receives tax-free cash from their pension
• because of the lump sum, the amount of contributions paid into a pension scheme is “significantly” greater than it otherwise would be.
• the additional contributions are made by the individual or by someone else, such as an employer
• the recycling was “pre-planned”.
• the amount of the tax-free cash, taken together with any other such lump sums taken in the previous 12 month period, exceeds
• £7,500 for events on or after 6 April 2015, or
• 1% of the standard lifetime allowance for events before 6 April 2015
• and, the cumulative amount of the additional contributions exceeds 30% of the tax-free cash amount.

It looks like they all apply to her, apart from maybe the pre planned one & the final one (30% contribution).

As she has no salary, can she contribute the £2880 & obtain the top up from the tax man ?.

Thanks

Markavitch

Aged 58, I am semi retired, and my wife is full retired. I work one day a week, earning a gross £6k pa, rising to £7.5k pa in November. I do not currently have a co pension with this position, as I'm below the 10k annual salary requirement) The rest of my annual income is tax free, achieved by taking out half yearly tranches from my remaining cash lump sum in a SIPP (I have approx 2 years before the tax free sum runs out) In addition, I have a small DC pension from which I take out £500 per month which together with my work income takes me up to my personal allowance for the year. I also have a DB pension which I will receive at age 65 i.e.7 years time, state pension kicks in at age 67. My wife (age 56) has a deferred DB pension which she intends to take at age 60, circa £5,500 pa and a state pension age 67. She has no other sources of income. To maximise our tax positions over the next 2 years, am I correct in thinking that I can set up an additional/separate SIPP for myself, and also one for my wife? I would leave both in 'cash' with say HL, and in my case take the 25% cash lump sum asap, taking out monthly payments thereafter (adjusting the current monthly payment of £500 I take from my DC pension to ensure that I don't exceed my personal allowance for the year) In my wife's case, she can I think withdraw nearly the full amount out ( leaving, say, £100 in the SiPp to keep it open and avoid hefty closure charges) This would all be tax free as it would be well within her personal allowance. Are my thoughts correct or flawed! ? Thanks

jamesd

Bearingup wrote: »

As she has no salary, can she contribute the £2880 & obtain the top up from the tax man ?.

Yes. Little chance that her five year contribution increase will exceed 30% of the lump sums and also not be normal retirement planning.

30% = 13853 / 5 = 2770 gross so if she made no work contributions she could go over but she's just changed the basis of her contributions based on her changed circumstances and that's also accepted.

Bearingup

jamesd wrote: »

Yes. Little chance that her five year contribution increase will exceed 30% of the lump sums and also not be normal retirement planning.

30% = 13853 / 5 = 2770 gross so if she made no work contributions she could go over but she's just changed the basis of her contributions based on her changed circumstances and that's also accepted.

Thanks for confirming.

Lily1

Had some income tax taken from my drawn down amount in the last two payments. If I just leave this do H M R C refund this eventually? I am not working and receive a small pension over just over £114 per month.

Dazed_and_confused

If the tax deducted was more than your tax liability for the year and you don't file Self Assessment returns then yes HMRC will automatically refund sometime this summer/autumn.

But normally by the second payment the correct tax code is in place. Are you sure you have paid too much tax? Or have you varied the amount being taken from the pension? HMRC have probably based your code on your initial withdrawal.

Lily1

Nothing has changed, I only started draw down in June or July and was told they were using a tax code supplied by H M R C, then tax was deducted in the last two payments. Will wait for it to be refunded. Definitely haven’t exceeded tax liability as I haven’t worked for ten years.

nigelbb

Could someone please explain the relevant numbers for someone past state pension age in full time employment paying 40% tax? How much income per year can be funnelled through the pension scheme to reclaim the tax paid & then drawn out again with 25% tax free?