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Contribute to SIPP and then commence drawdown in the same tax year?

sxgirl
Posts: 16 Forumite

Just finished self-employment but still 3 years off State Pension and small DB pension. Will be using 2 small DC pots, small SIPP and savings until pensions kick in. My question is can I pay into my SIPP up to my income this year, get the tax relief credited, then later in the same tax year commence drawdown (either TFLS or UFPLS)? I know once I take any taxable pension out I can’t contribute more than the MPAA in future years, but not sure if some kind of recycling rule applies in this tax year. TIA
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My question is can I pay into my SIPP up to my income this year, get the tax relief credited, then later in the same tax year commence drawdown (either TFLS or UFPLS)?
Yes. The MPAA kicks in the day you do the UFPLS.
but not sure if some kind of recycling rule applies in this tax year.It wouldn't be recycling as you are putting the contributions in first.
I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.1 -
Thanks for the swift reply dunstonh !Just to be double sure, my self-emp income is only c£6k for the 3 months so far, and not intending to do any more paid work. So I was hoping to pop £4,800 in the SIPP, and then use up the remains of this year’s Personal Allowance by drawing down later in the year.0
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dunstonh said:My question is can I pay into my SIPP up to my income this year, get the tax relief credited, then later in the same tax year commence drawdown (either TFLS or UFPLS)?
Yes. The MPAA kicks in the day you do the UFPLS.
but not sure if some kind of recycling rule applies in this tax year.It wouldn't be recycling as you are putting the contributions in first.
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sxgirl said:Thanks for the swift reply dunstonh !Just to be double sure, my self-emp income is only c£6k for the 3 months so far, and not intending to do any more paid work. So I was hoping to pop £4,800 in the SIPP, and then use up the remains of this year’s Personal Allowance by drawing down later in the year.
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dunstonh said:
It wouldn't be recycling as you are putting the contributions in first.1 -
Thanks for the tips. Having read a page on the recycling I think my lump sum will be small enough not to trigger the recycling issue but I will check it out properly before going ahead.0
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Provided the tax-free lump sum is no more than £7,500 it does not infringe pension recycling rules.1
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