HL SIPP Question

moneyfoolish

My wife has around £6000 in her HL SIPP Income Drawdown account. She wants to draw some income but wants to ensure that no tax is taken automatically. Her only income is her State Pension of £7,385. Her Personal Allowance for 2018-19 is £10,665 as the maximum has been transferred to me. Her Current tax code and month 1 indicator on the HL site is shown as 328N which is what I would expect (£10,665 - £7,385) and she has drawn no income for 2018-19. She has also received about £2,000 bank interest for 2018-19. My assumption is that if she draws no more than £3,280 from her SIPP Income Drawdown account in March then no tax will be taken automatically via HL. Am I correct?

squirrelpie

Her Current tax code and month 1 indicator on the HL site is shown as 328N

I didn't know HL published individual tax codes on their site. Where can I find it, please?


If HL have a tax code for your wife, it normally implies she has already drawn money from the account. Is that correct?


If so, then you are correct if she takes 100% taxable money from the SIPP. If not, then she will be taxed at the emergency rate as explained on https://www.hl.co.uk/retirement/preparing/tax-matters/emergency-calculator


This taxation is only temporary and will be refunded in due course, or can be refunded quicker if you call HMRC and ask for it. It can be avoided by making a small withdrawal initially so that a tax code is issued to HL, which will then be used for future withdrawals. You might want to make the first withdrawal fairly soon so as to complete a second withdrawal within the tax year.

moneyfoolish

1. I didn't know HL published individual tax codes on their site. Where can I find it, please?


Select your "SIPP Income Drawdown" account then click on the "DRAWDOWN INFORMATION" tab and then the "ARRANGEMENT INFORMATION" tab just under the title "Flexible Drawdown Information" if this is not the default selection. You will then see the tax code given to HL by HMRC next to the narrative "Current tax code and month 1 indicator (if applicable):"


2. If HL have a tax code for your wife, it normally implies she has already drawn money from the account. Is that correct?


Yes. She has already taken a small amount of income from the account in the previous tax year but nothing for 2018-19. She now wants to take a larger amount but doesn't want to be involved with reclaiming tax from HMRC so wants to be sure that what she takes will not be taxed at source.

lisyloo

Has she thought about sending a secure message to HL.
They are usually pretty good and answer would be in writing.

moneyfoolish

lisyloo wrote: »

Has she thought about sending a secure message to HL.
They are usually pretty good and answer would be in writing.

Will do that if we don't get a definitive answer from here.