Flexi Drawdown Queries

Sue58

Triumph13 wrote: »

Personally I would opt for the low stress route in the OP's position. The number one priority is to use this year's PA before the end of the tax year. That is simply and easily done by taking an UFPLS.
OP then has a whole year to compare platform charges, should she so wish, and work out whether it's cheaper to a) keep taking UFPLS each year; b) take the full TFLS on the balance (moving it to an ISA) and put a drawdown arrangement in place to take PA in subsequent years; or c)transfer to another provider first then take routes a or b.
There is no point suffering the stress of trying to get all that lot decided and arranged before the end of this tax year.
It's also not worth being stressed about the taxman issuing you an emergency tax code and snaffling some of your UFPLS. 5 mins on the phone or online and the nice people at HMRC will send you a refund cheque within a couple of weeks.

Thanks for that and I think you are quite right because I do want to take the low stress option. Therefore, I have decided to to go the UFPLS route and take my personal allowance for this year plus the 25% tax free that goes with it.

where_are_we

Fidelity have a £50,000 minimum SIPP balance rule to enter drawdown and take a TFLS. Op has sufficient funds but others with less than £50,000 should be aware of this and as such would only be able to UFPLS. Hargreaves Lansdowne do not a minimum balance rule for drawdown , so if you have a smaller SIPP (< £50,000) and intend taking a TFLS, might be the better option.

ffacoffipawb

dunstonh wrote: »

It wouldnt raise much tax. It would harm the economy and there are far easier targets (such as salary sacrifice) that are more stealth like in tax and would raise a heck of a lot more.

Plus, it doesn't really fit with government policy of either party for the last 30 years which has seen the tax free cash extended rather than restricted.

As I have commented previously, the Lib Dems propose capping tax free cash at £40k.

They are currently a political irrelevance, but the political situation itself is bizzarre at the moment.

I plan on taking my full SIPP PCLS in June whether I retire or not. Not putting my future at stake at the whim of envious corrupt politicians.

I wonder if Vince Cable has availed himself of more than £40k of tax free cash in the past, something he wishes to probibit others from doing.

MK62

The bottom line is we do not know what will happen over the next 6 years.......the current govt can only really function with DUP support, and that could be very fragile should a deal be agreed with the EU that is unpalatable to them - it's not impossible that we could be looking at a general election this year, and who knows what the makeup of the next parliament would/will be, or what, if indeed anything, might change around pensions and the tax free element.

As there is no real advantage to the OP in spreading out the tax free element over a period of years vs taking it now, in her shoes, I'd take it now.......but it could just as easily turn out to be irrelevant either way in the end.

Due to the OP not being 100% sure and the "time pressure" of the end of TY approaching, Triumph13's suggestion to UFPLS now and decide later might well be the most sensible approach for now though.

EdGasketTheSecond

I think there would be a public uprising if any gov't tried to scrap the 25% TFLS. That is the basis on which people have paid into a pension all their lives so they can't change the rules retrospectively. They could however change rules for future contributions but it would make it difficult for providers to have two pools of money to track; with and without a TFLS.

MK62

EdGasketTheSecond wrote: »

I think there would be a public uprising if any gov't tried to scrap the 25% TFLS. That is the basis on which people have paid into a pension all their lives so they can't change the rules retrospectively. They could however change rules for future contributions but it would make it difficult for providers to have two pools of money to track; with and without a TFLS.

I agree that scrapping it might be politically difficult, but restricting it further in some way probably wouldn't be that hard a sell tbh......just like reducing the LTA, reducing the annual allowance, introducing and then slashing the MPAA.....

ArchBair

I tend to agree with Triumph13, my wife went the UFPLS route in nearly the exact circumstances as the OP. Initially, she could not decide between taking the full 25% TFLS or go UFPLS but in the end she opted for UFPLS and has since continued with it.

Sue58

Thought I would update you on this thread. I decided to go down UFPLS route. I telephoned Fidelity and talked to one of their SIPP advisors. They sent out the UFPLS form and also told me to phone HMRC to ask them to send them a tax code (as I am a non earner) so that they do not have to deduct tax. I did this and on Friday I received the full £11,850 plus the 25% TFLS directly into my bank account.

I must admit that Fidelity made this all very easy for me especially as they make no charges for drawdown. So I'm very pleased with the way they have handled this on my behalf.

Dazed_and_confused

They sent out the UFPLS form and also told me to phone HMRC to ask them to send them a tax code (as I am a non earner) so that they do not have to deduct tax. I did this and on Friday I received the full £11,850 plus the 25% TFLS directly into my bank account.

Was this your first ever payment from this pension fund?

If so you appear to have managed something which I don't recollect anyone else on here ever managing, getting HMRC to issue a tax code to a company (employer or pension provider) before they have paid you something.

What's your secret?

Sue58

Dazed_and_confused wrote: »

Was this your first ever payment from this pension fund?

If so you appear to have managed something which I don't recollect anyone else on here ever managing, getting HMRC to issue a tax code to a company (employer or pension provider) before they have paid you something.

What's your secret?

Yes, it was my first ever UFPLS payment.

There is no secret, I just acted on the advice/information the Fidelity SIPP advisor gave me. He told me in my telephone drawdown briefing that I should call HMRC and give them Fidelity's online PAYE Ref Number, so that as a non earner, HMRC could forward them a tax code prior to the UFPLS payment. HMRC were happy to oblige and sent the tax code online using the online PAYE Reference Number.

That's why I said I was impressed with how easy it all was and the way Fidelity handled all this on my behalf.