More planning questions.

atush

Is it possible to put it into income funds & then later decide when I want to get at the capital.

That means you would be paying 40% tax on it. So i'd suggest as others above to deplete your sipp by SPA.


Putting any money you dont require into yur S&S isa. Plus consider as you are SE to put new in money into the Sipp, if you think you can pull it out by SPA.

Triumph13

A bag-of-a-fag-packet calculation, assuming you want a level income. You said you'll be close to HRT from SP age so I've assumed combined income then of £45k pa which is just over £38k post tax. You are currently on £25k which is just over £20k post tax so that's £18k a year to find from your SIPP and investments. If you were to keep doing that part time job until 66, and draw the SIPP down evenly over that time, then, ignoring any investment growth, you could get £14,167 out a year (a sixth of £100k with only 75% of it being taxed). That leaves you needing to pull £3,833 from your ISA to get to the £38k a year total spendable money.
6 years of that takes £23k of your ISAs leaving about £77k which could give you an income of another £2.5k or so if you so desired.

If you want to stop the part time work before SP age, then each year early would require you to take another £18k from your ISA pot (you lose a year's part time earnings, but pay less tax on your SIPP drawings). The earliest you could stop therefore and still have that flat £38k pa spending money is probably 62.

Truffle_Snuffler

Thank You for all the replies & assistance. So, to summarise, from a tax point of view it looks like my best option is to start drawing the SIPP up to the basic rate tax limit & reinvest into a S&S ISA? No need time restraints to start worrying about the ISA at the moment?

kidmugsy wrote: »

Now, since you are drawing down the taxable bit of a pension the amount you're allowed to contribute to a pension is limited to £4k gross per tax year, so £3,200 net. So, if you feel you can afford to, bung that £3,200 net back into your SIPP: it's worth 6.25% more there than putting it into an S&S ISA. So, put it in, let the tax relief reach the SIPP, and draw it out again. Repeat each year in which you will be paying only in the 20% tax band.

Kidmugsy, could you possibly expand on this suggestion please? Would this mean opening a completely new SIPP to reinvest the £4k p/a or would it need to go back into the original SIPP?

kidmugsy wrote: »

Really, you are spoiled for good options.

I never realised that getting the best out of this would have so many options. As you say, It looks like I'm spoiled for choice. However, with limited knowledge, I'm not sure that that making the decisions will be easy. Looks like there are expensive mistakes that could be made. I'm still not sure that it wouldn't be a good idea to talk to an IFA if I can find one that would work on a basis that I'm comfortable with.

Audaxer

Truffle_Snuffler wrote: »

So, to summarise, from a tax point of view it looks like my best option is to start drawing the SIPP up to the basic rate tax limit & reinvest into a S&S ISA?

Yes, that appears to be the best option.

No need time restraints to start worrying about the ISA at the moment?

Sorry, but I don't really understand the question above?

kidmugsy

Truffle_Snuffler wrote: »

Kidmugsy, could you possibly expand on this suggestion please? Would this mean opening a completely new SIPP to reinvest the £4k p/a or would it need to go back into the original SIPP?

Either would do. I did it the second way - it seemed simpler.

Truffle_Snuffler

Audaxer wrote: »

Yes, that appears to be the best option.
Sorry, but I don't really understand the question above?

Sorry, the second statement was more rhetorical than anything (and badly worded due to going back & rewriting) All I meant was that there was no "best time" to do anything with my ISA as it did not have any effect on my tax situation.