House Sale - Lump Sum Dilemma

Keith_Clunk

For a number of years, on and off, I have attempted to research my situation but have failed to obtain clear answers. Hopefully members here can assist in lighting my way ..

I am currently 57 years old, stopped working at 49 and moved to SE Asia. Divorced, no dependents. Mortgage free and debt free. I rent my one property in the UK through an agent which I bought in 2001 and lived in for 12 years up until moving overseas.

I recently consolidated 4 (of 5) personal pensions into one SIPP and have not made any pension contributions at all for over a decade.

With the current state of affairs my rental income no longer meets my financial needs (foreign exchange, value of £ etc.) and I've been periodically dipping into my ISA, but the ISA will not last forever. I am cash poor, but asset healthy.

In a nutshell; I want to sell my house in maybe 18 month's time as I have no other worthy assets. Which, hopefully, will give me approximately £390k, after costs, fees, CGT etc..

I want to put as much into my SIPP as possible without crossing any penalty lines and to use carry forward. I realise rental income is unearned income in terms of pension contributions, so (finally) my question is: -

- What is the maximum, in actual monetary terms, that can I transfer from my bank account into my SIPP?

Also, I recently opened a NS&I premium bond account so that could be max'd out to £50k, also put £20k into an ISA .. Out of curiosity, what would you do with the rest of the proceeds from the house?

Many thanks in advance :cool:

Dazed_and_confused

I would say £0.

Haffertee

I think it depends on the provider - some would allow you to contribute. However it doesn’t sound like you would be eligible for any tax relief so it doesn’t seem like it would probably be a good idea.

Brynsam

Keith_Clunk wrote: »

Also, I recently opened a NS&I premium bond account so that could be max'd out to £50k, also put £20k into an ISA .. Out of curiosity, what would you do with the rest of the proceeds from the house?

Presumably using your UK house as the correspondence address...?

Buy yourself some proper financial advice before it's too late. There is nowhere near enough information in your question for anyone here to give meaningful help (are you a UK taxpayer??), other than to point out the law relating to contributions to a UK pension (clear explanation here: https://www.myexpatsipp.com/mesinsights/sipp-for-non-uk-residents), or remind you that if you are not a UK taxpayer it's unlikely an ISA will be of any special benefit to you..

tacpot12

You can't use carry forward because you live outside the UK. It's up to you SIPP provider to say whether they will let you pay in amounts that don't require them to claim tax relief (you need to ensure that they don't claim any tax relief.)

If your SIPP provider allows it, you are likely to be able to invest all of the proceeds from the sale without overstepping any limits. However, the Lifetime Allowance (LTA) does apply to you, so you need to be careful not to put so much into the SIPP that you might breech the LTA before this can rise in line with CPI.

I don't see this as a reason not to invest via a SIPP because you investments will grow free of UK tax, and they can be invested immediately.

Linton

Your pension contribution in a year (if it is to benefit from tax relief) is limited to your earned income. It would appear you have none. Not getting tax relief makes it pointless since you could well be taxed when you withdraw the money. There is the additional option of contributing £3600 =£2880 net into a pension if you are not a tax payer. However this is trivial compared with your cash assets.


Investing £390K in a diversified portfolio of funds could sustainably generate say £12K-15K/year gross inflation linked.

Albermarle

Investing £390K in a diversified portfolio of funds could sustainably generate say £12K-15K/year gross inflation linked

A question from me , but also the answer could be of interest to the OP.
If you invest in funds, shares, ETF's , IT's etc outside of a pension or ISA , does this not make your tax situation more complicated , especially if it is a significant amount ? This is due to CGT, dividend tax etc
How difficult is this to manage ? Would you normally be better to have an accountant deal with it ?

xylophone

Also, I recently opened a NS&I premium bond account so that could be max'd out to £50k, also put £20k into an ISA

See https://www.gov.uk/individual-savings-accounts/if-you-move-abroad

If you open an Individual Savings Account (ISA) in the UK then move abroad, you cannot put money into it after the tax year that you move (unless you’re a Crown employee working overseas or their spouse or civil partner).

You must tell your ISA provider as soon as you stop being a UK resident.

However, you can keep your ISA open and you’ll still get UK tax relief on money and investments held in it.

Keith_Clunk

I appreciate all of the contributions. For such a simple existence life doesn't seem very staightforward.

I would'nt have thought my lifestyle is particularly unusual, not much different to people who retired to other parts of Europe once Brexit is done. I just found the UK very tiresome and it all began as a long holiday, which essentially it is still is. Once out of the EU I will probably return to the UK.

Linton

Albermarle wrote: »

A question from me , but also the answer could be of interest to the OP.
If you invest in funds, shares, ETF's , IT's etc outside of a pension or ISA , does this not make your tax situation more complicated , especially if it is a significant amount ? This is due to CGT, dividend tax etc
How difficult is this to manage ? Would you normally be better to have an accountant deal with it ?

Investing a significant amount outside a pension or ISA does make tax more complicated and record keeping more onerous. Its not just the reporting, but also tax avoidance by, for example, selling some high performing funds/shares to use up your CGT allowance if it is not otherwise needed. Its not a job for an accountant, more one for you as the manager of your investments.


This rather than actual tax savings is the main reason for many people to use S&S ISAs.

xylophone

57 years old, stopped working at 49

Have you checked on your state pension situation?

https://www.gov.uk/check-state-pension