How safe is my ISA

ColdIron

I don't want to drag this thread too far off topic but hopefully the OP has had some useful and comprehensive replies. You can only work with what you have, do you have any non tax sheltered cash or funds you could use? Just some random thoughts that may or may not help - Could you use some of your income to fund it if this wasn't a squeeze? Naturally this would reduce your income but so would removing capital from your ISA to a degree if your SIPP was not in drawdown. If you moved each years contribution into drawdown (whether or not you took income from it) you could take £900 tax free and use it to replace some the income you sacrificed (reducing your effective contribution to £1,980). Be mindful that there can be additional charges for a SIPP in drawdown with some providers. How much tax you pay is up to how much you withdraw. I take just enough to fully use my Personal Allowance and this allows me to maximise the Starting Rate for Savings amongst other allowances. You will need to run the numbers for different scenarios but it is a course of action worth pursuing

Edit: I assume you have unused Personal Allowance after other income, the case is not so compelling if you will only hand most of the rebate back on withdrawal

Alexland

Audaxer wrote: »

I've only just opened a SIPP with £2,880 (which will be grossed to £3,600) as I'm retired. I'll probably go the other way and Bed and SIPP from an ISA each year, although not looked into that yet as to how it works. It will take a good few years for the SIPP to build up to anything substantial, but I think it's worth it for the tax benefits, although not sure when it will be worth starting drawdown.

I don't see any problem moving ISA money into your SIPP to get the modest tax advantage (as long as you wouldn't become a higher rate tax payer when you draw it down) and estate planning benefits. Unless you are leaving yourself short for any required lump sums for cars, home improvements, holidays, substantial gifts, etc. Just make sure your pension beneficiaries keep getting updated as it might be the last pension you draw or might outlive you.

If the deal is still available in 23 years time at 60 then I would certainly plan to recycle some of my LISA money (then my wife's LISA when available 6 years later) into my wife's pension until she is 75. That would be my 21 year transfer project. Probably can't do it myself due to LTA risk.