How did they get this figure?

[Deleted User]

I had a SIPP with a cash balance of £580 that I requested a payment for. It's with HL and I'm a basic rate tax payer over the age of 55. I'm shocked to see that the deductions have reduced it to £233.

I expected 25%tax free with the rest taxed at basic rate.

bowlhead99

HL have an 'early account closure fee' to discourage people from opening a SIPP, making HL do all the compliance work to set up a pension account and obtain tax reclaims from HMRC (especially while just holding cash and not generating fee income for HL) and then closing the account within a year of setting it up.

If you were charged that fee it would be £285+VAT which is a little bit more than the difference between your cash balance in the pension and what arrived in the bank.

Alternatively if they only charged you the standard account closure fee it's £25+vat (£30), leaving £580-£30 = £550 withdrawn,

If you had already taken your lump sum from this pension and we drawing down the last £550, it would be income taxed at whatever tax code rate they had for you. But if it was an uncrystallised lump sum (UFPLS) withdrawal, you're right that 25% should be tax free and only 75% taxed using the tax code they had, which even at high rates would see you clear £300 net from the £550.

What does your online account statement show in the cash account as the narrative for amounts paid out? If your other month to month admin fees were all paid up to date, the deductions from the £580 should only really be tax or account closure charges at their published rates, and the net amount paid to your bank account

Dox

Missu wrote: »

I had a SIPP with a cash balance of £580 that I requested a payment for. It's with HL and I'm a basic rate tax payer over the age of 55. I'm shocked to see that the deductions have reduced it to £233.

I expected 25%tax free with the rest taxed at basic rate.

Sounds as if you've just ignored charges...

[Deleted User]

Update - I queried the charges with HL and they have agreed to refund so £295 + VAT will be with me soon.

drumtochty

Good Result!