Hargreaves Lansdown SIPP help please.

sparkiemalarkie
sparkiemalarkie Posts: 932 Forumite
Tenth Anniversary 500 Posts Name Dropper
Hi I have opened a SIPP (last tax year) with HL.
I have paid in £2,880 and have had the 25% added - now £3600
I have received my form and illustration for drawdown
and now I'm stuck

My plan is to withdraw the 25% and access the balance in an ad hoc way leaving £1,000. Repeat

Do I want to move ALL of my SIPP into drawdown or just the 25% ?
Or something else?


I will contact HL by secure message when I want to withdraw.


tia


sparkie


PS I still have over £4000 tax free allowance to use
«1

Comments

  • Marcon
    Marcon Posts: 13,729 Forumite
    Eighth Anniversary 10,000 Posts Name Dropper Combo Breaker
    What are you actually trying to achieve? You do realise that if you draw any benefits in excess of your 25% tax free lump sum (£900), you will find yourself subject to the £4,000 a year Money Purchase Annual Allowance?
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
  • Audaxer
    Audaxer Posts: 3,547 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    The best way would be draw out £2,600 the first year by a UFPLS. You will be taxed but you will be refunded eventually if you are under your personal tax allowance. As you are leaving £1,000 in the account you can pay in £2,880 next tax year and after the tax is added you can take out a UFPLS for £3,600, still leaving £1,000 in the SIPP. Therefor from year 2 onwards you will get all the tax free money back if you are under your tax free allowance.
  • Marcon wrote: »
    What are you actually trying to achieve? You do realise that if you draw any benefits in excess of your 25% tax free lump sum (£900), you will find yourself subject to the £4,000 a year Money Purchase Annual Allowance?



    This thread outlines what I'm hoping to achieve.


    https://forums.moneysavingexpert.com/discussion/5580163/paying-2880-into-pension-when-retired


    When I was reading it I completely understood, now I have the form in front of me I'm getting confused.


    sparkie
  • jamesd
    jamesd Posts: 26,103 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    When you take the 25% you must either use the 75% to buy an annuity or put into drawdown.

    For an easier life I suggest that you:

    1. take the 25% and place the rest into drawdown.
    2. ask for £141 of monthly income, so the balance won't go below £1,000. This will automatically handle the income tax via the tax code.
    3. set up regular monthly contributions of 240 net to get the 2880 in and tax relief added over the year. A bit extra for April, May and June this year needed, use a lump sum
    4. next year take the 25% and increase the monthly income to £225.

    From then on it'll just look after itself with you only having to take the tax free lump sum and add the 75% to the drawdown pot once a year. An easy life and the income takes care of most of the contribution cost.
  • sparkiemalarkie
    sparkiemalarkie Posts: 932 Forumite
    Tenth Anniversary 500 Posts Name Dropper
    edited 1 July 2018 at 3:16PM
    jamesd wrote: »
    When you take the 25% you must either use the 75% to buy an annuity or put into drawdown.

    For an easier life I suggest that you:

    1. take the 25% and place the rest into drawdown.



    Phew, thank you so much.

    3. I want to move my entire Vantage SIPP into drawdown (tick)


    4. I want to take the maximum tax free cash available (tick)


    Do I need to fill in the form again next year and ask for an illustration?

    thank you so much for the very clear summary of the process.


    sparkie
  • ColdIron
    ColdIron Posts: 9,701 Forumite
    Part of the Furniture 1,000 Posts Hung up my suit! Name Dropper
    Don't forget that if you take income from your drawdown account you will trigger the MPAA mentioned in post #2
  • sparkiemalarkie
    sparkiemalarkie Posts: 932 Forumite
    Tenth Anniversary 500 Posts Name Dropper
    edited 14 July 2018 at 10:48AM
    ColdIron wrote: »
    Don't forget that if you take income from your drawdown account you will trigger the MPAA mentioned in post #2


    Thanks, I don't think I will be needing it.


    I am receiving a small Teachers Pension and still have a wait of 4.5 years for my State Pension.
    I have no intention of going back to work, so won't be earning. I will therefore only be entitled to the £2880 contribution.


    sparkie
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    Phew, thank you so much.

    3. I want to move my entire Vantage SIPP into drawdown (tick)
    4. I want to take the maximum tax free cash available (tick)

    Do I need to fill in the form again next year and ask for an illustration?

    thank you so much for the very clear summary of the process.

    sparkie

    Yes , it's very irritating I've just done this for the second time yesterday, and will have to go through the same rigmarole next year as well as answering the same nanny state stupid questions over the phone before they even post the forms out along with pointless illustrations of what I might get if I get an annuity with my £2,700 even though ?obviously? I have zero intention of taking one out.

    Don't forget they will need proof of your age if you haven't already sent it in. The form annoyingly asks you to tick a box saying you've enclosed proof of age documents "if required" but doesnt tell you when it's required ! ( AFAICS anyway)

    Yes it's all #firstworldproblems but still annoying.
  • Audaxer
    Audaxer Posts: 3,547 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    Phew, thank you so much.

    3. I want to move my entire Vantage SIPP into drawdown (tick)


    4. I want to take the maximum tax free cash available (tick)
    I assumed you were planning to just leave the SIPP as cash rather than invest it? If you are leaving it in the SIPP as cash so you can benefit from the full amount of tax relief each year, surely the best way is to take out a UFPLS each year for all the cash (instead of putting it into drawdown) apart from £1,000 left in to keep the SIPP open, and then do the same in subsequent years?
  • Audaxer wrote: »
    I assumed you were planning to just leave the SIPP as cash rather than invest it? If you are leaving it in the SIPP as cash so you can benefit from the full amount of tax relief each year, surely the best way is to take out a UFPLS each year for all the cash (instead of putting it into drawdown) apart from £1,000 left in to keep the SIPP open, and then do the same in subsequent years?



    Yes I am planning on leaving it in the account as cash.


    Gosh, I will have to do some more reading.
    I thought I had just reached the point of understanding.


    Why is it better to take out a UFPLS ?
    My knowledge is very scanty


    sparkie
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