Lump sum recycling advice please

0779mike

Does it appear to be safe to make a single APC contribution of £31,592 which will be uplifted by Std Life to £39,490. £39,490 is less than 30% of the PCLS of £131,665 that I received last July.
Does that maximise my overall tax bill (salary and drawdown) ? 

MK62

All I can say is that AFAIK, the gross APC of £39400 would minimize your tax bill as far as possible while still being certain the recycling rules are not broken in respect of your first PCLS (given that the gross APC is below 30% of that PCLS, so you are then sure that at least one of the 6 recycling test conditions is not met in relation to that PCLS).
AIUI, you would also need to ensure,
 - that you have annual allowance carryover available to support any gross contributions this tax year >£40000,
 - that you have made no other pension contributions in TYs 17-18, 18-19 and 19-20 which , under the recycling rules, could be       considered as "significant increases" to your usual contributions,
 - and that you make no further contributions in TYs 20-21 and 21-22 which could also then be considered "significant increases".

Further, you would still need to satisfy yourself that your plan to take a further, smaller PCLS from your SIPP (which by then would also include your transferred works DC pension), would not itself then break the test for contributions in excess of 30% of the PCLS being considered/tested.

It would seem that delaying taking the PCLS from the SIPP for 2 further tax years would, in any case, then take the APC outside the cumulative period considered for contributions, in relation to the recycling rules, and you could mitigate that delay by using an UFPLS withdrawal from the SIPP each year - 25% of each UFPLS is tax free, and is, apparently, not considered to be PCLS cash for the purposes of the recycling rules.

0779mike

MK62 said:

All I can say is that AFAIK, the gross APC of £39400 would minimize your tax bill as far as possible while still being certain the recycling rules are not broken in respect of your first PCLS (given that the gross APC is below 30% of that PCLS, so you are then sure that at least one of the 6 recycling test conditions is not met in relation to that PCLS).
AIUI, you would also need to ensure,
 - that you have annual allowance carryover available to support any gross contributions this tax year >£40000,
 - that you have made no other pension contributions in TYs 17-18, 18-19 and 19-20 which , under the recycling rules, could be       considered as "significant increases" to your usual contributions,
 - and that you make no further contributions in TYs 20-21 and 21-22 which could also then be considered "significant increases".

Further, you would still need to satisfy yourself that your plan to take a further, smaller PCLS from your SIPP (which by then would also include your transferred works DC pension), would not itself then break the test for contributions in excess of 30% of the PCLS being considered/tested.

It would seem that delaying taking the PCLS from the SIPP for 2 further tax years would, in any case, then take the APC outside the cumulative period considered for contributions, in relation to the recycling rules, and you could mitigate that delay by using an UFPLS withdrawal from the SIPP each year - 25% of each UFPLS is tax free, and is, apparently, not considered to be PCLS cash for the purposes of the recycling rules.

Do you mean I should pay in £39,490 or £31,592 ?

Dazed_and_C0nfused

the gross APC of £39400

This equates to a net payment of £31,592.

MK62

Dazed_and_C0nfused said:

the gross APC of £39400

This equates to a net payment of £31,592.

What he said...
You will need to claim the HR tax relief yourself - usually done with a self assessment tax return.