Paying £2880 into pension when retired

Dazed_and_confused

But if it was the first payment then tax may well have been deducted.

And even if it has subsequently been repaid by HMRC you still include it on the Self Assessment return.

And include details of the HMRC repayment in the relevant box.

nxdmsandkaskdjaqd

Audaxer, Dazed and confused

Thanks for all your help on this. Sorry it took so long.

Audaxer

nxdmsandkaskdjaqd wrote: »

Audaxer, Dazed and confused

Thanks for all your help on this. Sorry it took so long.

That's okay. I've just noticed that it was you who started this thread 3 years ago. I had assumed you had just joined in a couple of days ago to ask your question. It was a couple of years ago that I came across the thread for the first time and I found a lot of the responses really helpful.

See_Em

Audaxer wrote: »

I assume the original poster is doing what a lot of people are talking about on this thread, i.e. paying £2,880 into a SIPP, leaving it as cash, and when the £720 tax relief is added, withdrawing £3,600.

As a no income person; when you do this the first time; can you pay in the GBP2,880, get the tax relief added and make a withdrawal in the same tax year?
If you have unused allowances from previous years can you contribute more than the GBP2,880 in a single year?

Dazed_and_confused

You would have to have qualifying earnings for pension contribution purposes of more than £3,600 before you could contribute more than that.

So with no income you are limited to £3,600 irrespective of what happened in earlier tax years.

can you pay in the GBP2,880, get the tax relief added and make a withdrawal in the same tax year?

In theory yes but you need to check with your providers terms to see what charges or restrictions they may impose. For example I think there is a complication with Hargreaves Lansdown if you don't leave £1,000 in the SIPP.

xylophone

For example I think there is a complication with Hargreaves Lansdown if you don't leave £1,000 in the SIPP.

Has that ended now? I had a vague idea that another poster had mentioned a revamp of HL SIPP charges - I had a look and saw this.

Account closure fee

No charge

Early account closure fee
(applies when your SIPP that has been open for less than 12 months and you close it by taking all the money as income)[

No charge


https://www.hl.co.uk/pensions/sipp/charges-and-interest-rates

I am assuming therefore that you can just open/close a new one every tax year and assuming you stay in cash, pay no charges at all to open/access/close?

I imagine that you'd still have the tax deducted on the amount over the PCLS and have to reclaim.

jerrysimon

Its that time of the year again to do this for my wife


HL no longer require £1000 left in the account. I think they charged me £30 last year so still made £700

See_Em

Can the logic being applied here be extended?
Say you have an income equal to or less than the personal allowance ie 12,500 in 2019/20, could you contribute 10,000 and get 2,500 tax relief ... and then access that when you have a low or no income year. Or if you are able to manage your income to have a basic rate income one year followed by a no income year?

jerrysimon

See_Em wrote: »

Can the logic being applied here be extended?
Say you have an income equal to or less than the personal allowance ie 12,500 in 2019/20, could you contribute 10,000 and get 2,500 tax relief ... and then access that when you have a low or no income year. Or if you are able to manage your income to have a basic rate income one year followed by a no income year?

Yes I did that with my wife for the last couple of years when she was earning 8K. Of course you have to be 55 or over to draw the money out and if, you draw it out, the total plus any earnings should not exceed your tax alloance or you will then pay tax on it. I left my wife's SIPP as cash for 3 years and then drew it all out when she stopped working. Also you need to check any pension you are paying plus what you put in the SIPP do not exceed your earning total when you do it.

cloud_dog

Just to add... If you withdraw any taxable income via this process any future DC pension contributions will not receive tax relief above £4k, due to MPAA regulations.