SIPPing towards retirement

missile

Hi,
I shall be 65 in April. Currently not working with £3,400 taxable income. I have applied to have marriage allowance transfer. After 25% tax free lump sum, I have £9,400 in a cash SIPP. I believe I can drawdown £8,700 and remain below my tax allowance threshold £12,100 for 2016/17?

My wife receives carers allowance, i.e. taxable income £3,406.85. We invested £2,880 (£3,600net) into a SIPP last tax year. We intend to deposit a further £2,880 before April 05th. After 25% tax free lump sum, I believe she can drawdown £5,300 (i.e. leaving a small balance to avoid closing fee) and remain below her reduced tax allowance threshold for 2016/17?

Many thanks for any comments :A

where_are_we

75% of your SIPP withdrawal is taxed and 25% is untaxed so you could withdraw the total balance of £9400 and not pay any tax. If you don`t want to close your SIPP, withdraw the maximum amount, which leaves you with a balance that avoids closure charges (check with your provider).
Your wife should contribute £2880 to her SIPP as soon as possible, so that the tax relief is added before she makes her withdrawal this tax year. This will take her balance up to £7200 and because 75% of any withdrawal is taxable she could withdraw all of it and still pay no tax.
My wife and I have used UFPLS (Uncrystallised Funds Pension Lump Sums) to make withdrawals from our SIPPs to fully utilise our personal allowances just like you intend doing.

missile

...
I think you may have misread.
AFIK, if I stay below my tax allowance none of the drawdown is liable for tax. If I withdraw £9,400 that would take my taxable income above my allowance and I would become liable for tax.

OldBeanz

If you withdraw £9400 then 25% is not taxable even if you were withdrawing a £1m the same rule applies. 25% of £9400 = £2350 so income as far as the taxman is concerned is £7050.

missile

I have edited my post to clarify.
£9,400 is available for drawdown after 25% lump sum tax free.