drawdown tax

AnotherJoe

Bootsox wrote: »

Sorry for the hijack but there seem to be a few HL aficionados on this thread.

Within their SIPP, I understand HL will allow shares in individual companies.

In the case of a SIPP, comprising purely individual company shares, what is the mechanism for HL levying their (0.45% in my case) fee?

e.g. do they do an annual valuation of the shareholding and levy accordingly?

I did message HL direct this question but no response (yet).

It's .45% on funds, not shares. Shares are much cheaper.

The mechanism is first from any spare cash knocking around in your SIPP, which is by far the most efficient way of doing it. AFter that you'll have to look up the rules or wait for HL to respond, but it's so efficient to use spare cash that you should just put some money in to ensure it comes from the SIPP.

There have been a few posts on why it's best, so you can either take it as read that it is, or maybe someone else can respond why in detail, I'm typing on a small tablet but in essence if you put £80 into your SIPP that will pay £100 of charges, anything else will cost you the full £100 plus possibly dealing charges if they need to sell some shares.

I always have a few £ lying around in my SIPP the charges are taken from that.
Ps it's quarterly charges AFAICR.

NordicNoir

Bootsox wrote: »

Sorry for the hijack but there seem to be a few HL aficionados on this thread.

Within their SIPP, I understand HL will allow shares in individual companies.

In the case of a SIPP, comprising purely individual company shares, what is the mechanism for HL levying their (0.45% in my case) fee?

e.g. do they do an annual valuation of the shareholding and levy accordingly?

I did message HL direct this question but no response (yet).

Quoted directly from HL's FAQ's:

The annual charge to hold shares, bonds, Investment Trusts, ETFs or gilts in the Vantage SIPP is 0.45% (capped at £200 per annum)

Management fees are charged on a monthly basis and are calculated based on the value of your holdings at the end of each month. They are collected in the next month.

We collect fees and charges from available cash on your account. If there is no available cash within your account, we will try to collect fees from cash you hold in your Fund & Share Account.

Our system will look to collect fees in this order:

Loyalty bonuses received on units purchased before 1 April 2014. If no loyalty bonuses then;
Cash in the account in which the fees were generated. If no cash on the account then;
Cash in your Fund & Share Account. If no cash in your Fund & Share Account then;
Sell holdings to cover fees from the account in which the fees were generated

jamesd

OldBeanz wrote: »

Next fy I intend drawing down £12k in the one transaction. I am a BR tax payer and will still be within that tax band with this withdrawal. I am trying to work out the first date I can do this and not have my SIPP provider deduct money at the higher rate. I would assume that I could draw the £12k (£9k taxable) some 4 months before the end of the tax year and the correct tax would be deducted (tax code assumption £9kx5 months HR payable, £9kx4 months BR). So is my optimum date (to allow me not to have to claim money back or provide my SIPP provider with a HMRC tax code) the 5th December?

6 April provided the pension firm has a tax code for you already.

The excess tax is from use of the emergency tax code if they don't have one for you combined with the assumption that the income will repeat each month. The tax code should eliminate both issues.

If they don't have a tax code for you then it's 1 March, the only month in which there will not be a second month in the tax year.

I've assumed that you're not taking out all of the money in the pot.

AnotherJoe

MichelleUK wrote: »

Quoted directly from HL's FAQ's:

The annual charge to hold shares, bonds, Investment Trusts, ETFs or gilts in the Vantage SIPP is 0.45% (capped at £200 per annum)

Management fees are charged on a monthly basis and are calculated based on the value of your holdings at the end of each month. They are collected in the next month.

We collect fees and charges from available cash on your account. If there is no available cash within your account, we will try to collect fees from cash you hold in your Fund & Share Account.

Our system will look to collect fees in this order:

Loyalty bonuses received on units purchased before 1 April 2014. If no loyalty bonuses then;
Cash in the account in which the fees were generated. If no cash on the account then;
Cash in your Fund & Share Account. If no cash in your Fund & Share Account then;
Sell holdings to cover fees from the account in which the fees were generated

Fair point, but its the "capped at £200" I was thinking of which means that likely you are not actually being charged 0.45%. Whereas Funds are not capped (hence I hold very few funds in HL)

I'd also forgotten the charges were monthly !!! Oopsy

Definitely its in your interest to have the charges come from spare cash within the SIPP, Usually with dividends and the like coming in you'd alwys expect there to be some knocking around.

jamesd

k6chris wrote: »

Interesting. I thought, based on other posts, that 'best practice' was to physically have about 3 years drawdown in cash, to avoid impact of market crash. Can this simply be achieved by just keeping the appropriate amount of money 'uninvested' in the SIPP and getting a monthly DD payment from the SIPP set up, which will presumable use that cash?

A year should suffice, that's what was used in the studies. Can be cash inside the SIPP, outside or some of each. If you have incone-producing investments they will tend to top it up, how much depends on the difference between income and withdrawing.

k6chris wrote: »

would better practice be to keep say 5 years DD in cash, and reinvest 2 years worth if there is say a 25% (insert your own predetermined rule) in investments?

If using modern drawdown rules and perhaps 6% withdrawing that would be 30% total and too much uninvested for normal times. The Guyton sequence of return risk reduction method increases bond holdings when equity prices are high. If bonds also look bad you could use cash or property or P2P. I'm using P2P at the moment.

NordicNoir

AnotherJoe wrote: »

Fair point, but its the "capped at £200" I was thinking of which means that likely you are not actually being charged 0.45%

Yes, so in the case of Bootsox, where they will only be holding shares, they will pay 0.45% p.a. on the first £44,444 beyond which, the fee is capped at £200.

mgdavid

OldBeanz wrote: »

Next fy I intend drawing down £12k in the one transaction. I am a BR tax payer and will still be within that tax band with this withdrawal. I am trying to work out the first date I can do this and not have my SIPP provider deduct money at the higher rate. I would assume that I could draw the £12k (£9k taxable) some 4 months before the end of the tax year and the correct tax would be deducted (tax code assumption £9kx5 months HR payable, £9kx4 months BR). So is my optimum date (to allow me not to have to claim money back or provide my SIPP provider with a HMRC tax code) the 5th December?

If your SIPP provider has a tax code for you this year then in my experience HMRC give them the same code to kick off next year.
If it's BR already then job done.

AnotherJoe

MichelleUK wrote: »

Yes, so in the case of Bootsox, where they will only be holding shares, they will pay 0.45% p.a. on the first £44,444 beyond which, the fee is capped at £200.

I wonder if this is where the "£200 charge for draw down" that the OP refers to, comes from, they've mistaken the annual fee for a per draw down charge?

Bootsox

MichelleUK wrote: »

Yes, so in the case of Bootsox, where they will only be holding shares, they will pay 0.45% p.a. on the first £44,444 beyond which, the fee is capped at £200.

This is an important point as the 0.45% "headline figure" has the potential to cast HL in a bad light.

My £150k, shares only, pension pot will have a fee equivalent to 0.13% PA (plus share dealing fees).