SIPP tax relief

xylophone

It is possible to take up to three "small pots" of £10,000 or less without triggering the MPAA.

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/money-purchase-annual-allowance-mpaa/

Small Pots or defined benefits triviality payment
The small pots rules were amended following the Budget to allow three pots of up to £10,000 to be withdrawn from non-occupational DC pension funds, for occupational DC pension pots there is no limit on the number of small pots that can be taken. This is paid 25% tax free and 75% subject to marginal rate income tax in the same way as an UFPLS. However, a small pots payment does not trigger the MPAA.

Worried_of_wakefield

Dazed & confused

But that would suggest she will continue earning £10k in which case she would be liable to tax on half the withdrawal.

Yes silly me of course, Having thought about it would a good plan be to load up her sipp as much as poss enjoy HMRC contributions then in 5 years time when she plans to retire age 60 she can withdraw any figure up to her personal allowance until funds exhausted. Maybe drip feed into an ISA but still tax free if done over time.

Only concern I have now is Xylophones comment regarding my recent LS we intend to use to kick start her new sipp.

xylophone

Only concern I have now is Xylophones comment regarding my recent LS we intend to use to kick start her new sipp.

What is the nature of the concern?

Worried_of_wakefield

What is the nature of the concern?

Just the issue of'recycling' my LS, don't wish to be chased down by HMRC in 12 months time

DairyQueen

Recycling rules here.

If you wish to be 100% safe then your wife can pay her pension contribution from an account in her sole name.

I have no earned income but have been topping-up my pension (net £2880) from our joint savings (from the current a/c in my sole name) for the last, few years. No problem at all.

There should be zero problem in your wife doing likewise up to the max of her income (net of tax relief).

xylophone

You said that your wife has been paying her income into the joint account where your lump sum is residing.

She could pay 80% of that income into the SIPP.

There is nothing to prevent your making a gift to your wife from your lump sum for her to use as she wishes.

It just seems to me neater for her to use her own sole account to make her pension contributions.

Worried_of_wakefield

thanks all, feel confident to proceed with a couple of sipps now, £2880 for me and probably £8k for the boss.

Just cant understand why this method of investment is such a secret, where else could you get these returns, I understand the future tax implications but providing you have a period of not earning ( wife aged 55 retires at 60ish then no income until state pension) she can then draw down up to £11/12K ish per year without giving anything back to the tax man.

DairyQueen

Worried_of_wakefield wrote: »

Just cant understand why this method of investment is such a secret

Err... choose one option to explain lack of awareness:
a) Extra cost to the public purse
b) Extra cost to the public purse
c) Extra cost to the public purse.
If more took-up the offer then I suspect the government would shut it down pronto.:shhh:

xylophone

I assume "the boss" has full access to that tempting lump sum in the joint account........WoW might find that he'll soon be getting postcards from a certain lady on a luxury world cruise ( and be blowed to the pension...you're only young once...):rotfl:

shinytop

If more took-up the offer then I suspect the government would shut it down pronto.

I agree but it's also easy to forget a lot of people don't have £2880 readily available even if they knew. I was explaining this trick to my sis-in-law recently before it dawned on me I might as well have been talking about £288,000 (we will help her now).

I'm surprised the PPE-type vultures haven't cottoned on to this business opportunity...