SS ISA or SIPP?

Stubod

Hi all,

For the last few years we have put money into both S&S ISAS and also SIPPS. However since we have both stopped working we can no longer afford to fund both. I am wondering which one to choose? My OH starts taking a private pension next year so will just edge into being a 20% tax payer, I have deferred my private pension for another year or two. (We are not at State pension age yet).

I understand that the most we can put in a SIP will be £3,600 (less 20%) as we are not earning. SIP's attract a 20% tax, and you get then take out 25% tax free, but then pay 20% tax (assuming you are above the tax limit for earnings), so I assume there is not much of a difference between the two?

Many thanks for any input...

dunstonh

SIPPs and ISAs have the same investment options at the same costs. So, the key things are taxation and maturity process (i.e. getting money out). So, which fits your objective the best?

Stubod

Hi and thanks for the reply.

We are currently using our "savings" to fund our day to day living. Next year my OH's private pension and lump sum should provide another couple of years before we need to "dig in" to alternative sources of money prior to our state pensions starting in a further 3 years.

We have about 50% of our funds in S&S ISA's,
30% in NSI products, (Index linked and Premium bonds),
10% in a property
the rest in "cash" to live off.

My current plan would be to start burning either the ISA's or SIP's before anything else, so probably in about 3 years....

dunstonh

Perhaps the SIPP would be better to meet your current goals if your income is currently under the personal allowance?

My current plan would be to start burning either the ISA's or SIP's before anything else, so probably in about 3 years....

or now if personal allowance is available whilst increasing the ISA contributions (or even drawing and paying into the pension at the same time.

Stubod

Thanks again for the reply.

...my OH will be in "tax" territory next year due to pension, but I assume it would be best for me to "defer"my private pension, (not yet due to take for 3 years), and burn my SIP's first thus taking advantage of the tax "rebate". Even if I take all the money out of the SIP, (keeping the total below the tax threshold), and put the money straight back into an SS ISA?....