Drawdown funds inside SIPP

TBC15

coyrls said:

Or make one annual withdrawal, which is what I do.  Selling to release the cash can be done as part of an annual rebalance.

The only problem is you can only save 3 free trades with II.

AnotherJoe

CRAIGSVILLE1 said:

coyrls said:

Or make one annual withdrawal, which is what I do.  Selling to release the cash can be done as part of an annual rebalance.

Would you do the one withdrawal in march every year, so not to get heavily taxed  early in the tax year? 

Apparently, that doesn't give any guarantee they won't tax you as if you are withdrawing 12x that amount in that tax year, even though it's impossible. Yes I know that is nonsensical but posters have reported that happening to them. 

CRAIGSVILLE1

TBC15 said:

coyrls said:

Or make one annual withdrawal, which is what I do.  Selling to release the cash can be done as part of an annual rebalance.

The only problem is you can only save 3 free trades with II.

Thanks for that. I did notice that as well , but if I had 10 funds, I would be only be buying, or selling 10 trades at most to rebalance, so 3 free saved trades + 1 free monthly trade , I would only be paying for 6 trades at most I hope .

Are my calculations correct ?

cfw1994

coyrls said:

CRAIGSVILLE1 said:

coyrls said:

Or make one annual withdrawal, which is what I do.  Selling to release the cash can be done as part of an annual rebalance.

Would you do the one withdrawal in march every year, so not to get heavily taxed  early in the tax year? 

February usually, as that gives me time to sort things out if something goes wrong (although nothing has gone wrong, so far).

Does that not result in HMRC thinking you should be on a hefty tax code & cause some grief in recovering the extra tax paid?
This is an area I need to dig into (Aviva membersite scheme for me) 

TBC15

CRAIGSVILLE1 said:

TBC15 said:

coyrls said:

Or make one annual withdrawal, which is what I do.  Selling to release the cash can be done as part of an annual rebalance.

The only problem is you can only save 3 free trades with II.

Thanks for that. I did notice that as well , but if I had 10 funds, I would be only be buying, or selling 10 trades at most to rebalance, so 3 free saved trades + 1 free monthly trade , I would only be paying for 6 trades at most I hope .

Are my calculations correct ?

I think you would need some well timed foot work over a couple of days to get the 4th free trade. I’d probably go for one free trade every month.

coyrls

CRAIGSVILLE1 said:

Or a small withdrawal in February to  generate M1 tax code, then take the rest out in March?
Do you have to do this every tax year, or just the 1st year in drawdown?  

My tax was sorted out after the first year.

coyrls

cfw1994 said:

coyrls said:

CRAIGSVILLE1 said:

coyrls said:

Or make one annual withdrawal, which is what I do.  Selling to release the cash can be done as part of an annual rebalance.

Would you do the one withdrawal in march every year, so not to get heavily taxed  early in the tax year? 

February usually, as that gives me time to sort things out if something goes wrong (although nothing has gone wrong, so far).

Does that not result in HMRC thinking you should be on a hefty tax code & cause some grief in recovering the extra tax paid?
This is an area I need to dig into (Aviva membersite scheme for me) 

The first year they taxed me, I fill in a tax form anyway and so I recovered the tax that way.  In subsequent years I have been taxed as if I was making a single withdrawal not, as AnotherJoe suggests, as if I was making 12x withdrawals.  In fact currently I am only taking out what I can tax free from the SIPP and so apart from the first year, I have not paid any tax on my withdrawals.

In terms of using up free trades, I use trigger based rebalancing and so I can use free trades during the year if my triggers are reached.  In addition I do a "tidy up" each year to release funds for my withdrawal, which in practice means selling units in one or two funds, not all of them, if things are well out of wack but not at the trigger level I might also sell additional units to add to a fund that has dropped.  It's nice to trade "free" but I think you should always keep the cost of trades in perspective; they are unlikey to add a significant percentage to your costs unless you're day trading or something.

I use Interactive Investor and so other platforms may be different.