Start date when starting to take pension (SIPP)

NedS

I'm not there yet so it's a hypothetical question for planning purposes, but how easy is it to accurately time receiving the first payment when starting to take a SIPP pension?

Suppose I want to start taking my SIPP with the first payment as an UFPLS just before the end of the tax year and want it to go through after 15th March but before 6th April, how easy is it to achieve that? Is it possible to give a SIPP provider an exact date to start payments? I don't care if there's a slight delay in actually receiving the money, it's the date it's processed (payment date declared to HMRC) that's important - i.e, after 15th March but before end of tax year to benefit from that year's tax free allowance.

Dazed_and_confused

You would have to go to each SIPP provider and ask them when they make their monthly payments as I doubt very much that they will set up a payment just for your SIPP on its own. Some may make multiple payments each month I suppose but you would have to ask each one.

Also, what relevance does the 15th March have?

Most pension providers discussed on here seem to make payments monthly, the twelfth month of the tax year running from 6 March to 5 April.

I suspect you may have misunderstood how PAYE works but maybe some clarification will make things clearer.

NedS

Thank you for your reply. I didn't realise SIPP providers may have set payment dates for all customers, but it makes sense I suppose. I will ask closer to the time.

Dazed_and_confused

They may not, you might be able to specify any date you want but I suspect not. No harm in asking though.

But are you mixing up when it is reported with the payment date reported.

A pension company may choose to file their RTI reports at the beginning of each month but each one has the date the pension payment will be made on it.

You would have to ask the pension company more about this but I think you are likely to vastly limit the number of SIPP providers you can use. Assuming of course they will tell you when they intend to report under RTI.

NedS

Dazed_and_confused wrote: »

But are you mixing up when it is reported with the payment date reported.

A pension company may choose to file their RTI reports at the beginning of each month but each one has the date the pension payment will be made on it.

Exactly, it's the RTI payment date that is important, not the date they file the RTI return.

Of course, thinking about it, with such a large number of payments to make it makes perfect sense that these would all be made on the same date, just as an employer would pay all it's employees on the same date rather than letting them choose their own preferred payment dates as this will massively simplify their RTI reporting requirements.

Reluctantpensioner

In my experience, pension providers have a "tax year deadline" for withdrawals. It will vary by company: you should be able to just ask what it is.
If it is your first payment with this provider it will take longer as they are required to go through certain due diligence - making sure you know what you are doing, not spending all your pension to buy a lambo etc. They may ask if you have taken advice - but this is not mandatory, you should be able to say "I know what I'm doing". They'll encourage you to go to pensionwise.
Get the request in before the cut off date, and tell them it is for a specific tax year: but be careful if it's setting up a monthly amount that you aren't asking for more payments in the tax year than you meant.
Don't be surprised if you initially get a massive tax deduction (tens of times what you expect) this is annoying but unavoidable. As you are at the end of the tax year, get a P55 in quickly and you can get it back quite quickly.

NedS

Thank you for the insight.

Yes, I would plan to take my annual tax free allowance (£12500) plus 25% TFLS as a UFPLS payment just before the end of the tax year in March. I understand I may be taxed on emergency tax rates, but as it's right at the end of the tax year it should be easy enough to sort out any tax rebate.

Dazed_and_confused

I would plan to take my annual tax free allowance (£12500) plus 25% TFLS as a UFPLS payment just before the end of the tax year in March

The tax deducted would be £3,957.80.

You can either claim anything due back or if you do nothing HMRC will automatically refund any excess tax deducted sometime in the months after the end of the tax year. Assuming you are not completing a Self Assessment return for that tax year.

badmemory

Is the 15th March your 55th birthday?

pafpcg

NedS wrote: »

I'm not there yet so it's a hypothetical question for planning purposes, but how easy is it to accurately time receiving the first payment when starting to take a SIPP pension?

Suppose I want to start taking my SIPP with the first payment as an UFPLS just before the end of the tax year and want it to go through after 15th March but before 6th April, how easy is it to achieve that? Is it possible to give a SIPP provider an exact date to start payments? I don't care if there's a slight delay in actually receiving the money, it's the date it's processed (payment date declared to HMRC) that's important - i.e, after 15th March but before end of tax year to benefit from that year's tax free allowance.

It depends very much on the SIPP platform!

Some will have set dates for distributing cash, even for UFPLS, for example Alliance Trust Savings sent cash out only on the 12th of every month (but this was 5 years ago and it may be different now). For UFPLS withdrawals, AJBell YouInvest allow you to specify the date you require BUT don't expect them to stick to the date! In the four years I've made UFPLS withdrawals at AJBell, it's always been late (from 2 days late to two weeks and the final closure took three weeks to complete) - what my experience proved was that at AJBell the key was to have the funds cleared into the cash account before the day when the withdrawal request was received at AJBell; even having made an equities sale for the required funds and having a settlement date just one day after the request was first examined (and well before the actual requested date) causes their system to reject the request with "insufficient funds" and send a snail-mail letter! If you can get the funds available in time, then it shouldn't take more than a week or so to get the withdrawal organised. I'm not recommending AJBell over any other platform, but I believe that they could meet your requirement for processing your UFPLS withdrawal between 15th March and 5th April.

In my experience, SIPP platforms use the old BACS timetable for sending funds - you don't receive the funds in your bank account until two business days after despatch. But, as you say, that's not a problem for you.

marlot

NedS wrote: »

it's the date it's processed (payment date declared to HMRC) that's important - i.e, after 15th March but before end of tax year to benefit from that year's tax free allowance.

These are the HL dates; they seem to meet your needs?

https://www.hl.co.uk/retirement/drawdown/payment-calendar