Paying £2880 into pension when retired

ffacoffipawb

cloud_dog wrote: »

Hi

The bit you quoted relates to making pension contributions, not withdrawals. In my example:

As soon as you withdraw £1 more than the 25% TFLS the reduced £4k contribution allowance comes in to effect.

In the above example, I am unsure if withdrawing by the 'small pot' rule, with a pot less than £10k, would trigger the £4k contribution allowance or not. Would need to investigate that. For the OP it is mute anyway (based on what we know atm).

Taking a small pot of £10k does not invoke the reduced MPAA of £4k.

For those of us that have more than LTA, though not yet crystallised 100% LTA, it does not count towards usage of the LTA either.

In effect, the true LTA for anyone is LTA plus £30,000 (3 small pots) if you can arrange it, which is useful.

Hargreaves Lansdown will create a dummy small pot from a SIPP specifically for this purpose. I know because I have done this.

xylophone

.was thinking for other years going forward as a general rule though more than this one specifically.

Your husband will have no "relevant earnings" in the next tax year after he retires?

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/tax-relief-members-contributions/

If so, while he is under 75, he can contribute up to a net £2880 per tax year to a SIPP and the provider will claim £720 from HMRC and add it to the pension.

the_cat

xylophone wrote: »

Your husband will have no "relevant earnings" in the next tax year after he retires?

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/tax-relief-members-contributions/

If so, while he is under 75, he can contribute up to a net £2880 per tax year to a SIPP and the provider will claim £720 from HMRC and add it to the pension.

Thanks for that link, im pretty sure it answers the elusive question at the heart of my thinking........but just to clarify

Relevant earnings does not count the income derived from a DB pension, even though it is still a taxable source of income? So he will in effect be 'earning nothing' for this purpose and therefore subject to the £2880 maximum

xylophone

Relevant earnings does not count the income derived from a DB pension,

Pension income (whether DB or DC) does not count as relevant earnings.

busybee100

Hi
My friend has gone into drawdown and made two withdrawls. When I look at her HL account there's cash in a full pot and cash in a phased pot. She will be very close to her personal allowance this year but needs to make another withdrawl. Does it matter which pot it comes from for tax purposes?
I've read there is a tax advantage to phased but may be mistaken. Happy to read up myself if theres a link to a simplistic explanation, the ones I've found presume a higher level of understanding than I currently have.

Thank you for any help.
Oh also is there a way of me being able to tell which parts of her withdrawl are capital and which are income?

xylophone

My friend has gone into drawdown and made two withdrawls. When I look at her HL account there's cash in a full pot and cash in a phased pot.

Are you saying that she has taken the 25% tax free PCLS from one but not from the other?

busybee100

I don't know to be honest xylophone. I've spoken to HL, not about specifics just generally. They say she must have taken two withdrawals as there's two pots full and phased. She's taken out £3300 this tax year which has been spread over both pots. Can I presume 25% of this is tax free? I need to work out how much tax free she has already taken and if there's an advantage to taking the next amount from just the phased pot.

xylophone

They say she must have taken two withdrawals as there's two pots full and phased.

Should your friend not be ringing HL to discuss her position?

busybee100

I deleted my earlier post as I felt I was posting too much information. I'll wait until she comes back and call H&L again.

nxdmsandkaskdjaqd

I am currently completing a tax return where I have paid £2880 in to HL SIPP and received £720 in tax relief.

Do I have to enter the £2880 in the Pensions section:
Payments to registered pension schemes (Also known as PPR) where basic rate tax relief will be claimed by your pension provider (called Relief at source). Enter the payments and basic rate tax

And do I also need to complete £3600 in the Pensions section:
Pensions (other than State Pension), retirement annuities and taxable lump sums treated as pensions: (Optional)