ISA or SIPP

stephenadarglas

If you had 100k in a SIPP and 100k in an ISA and you needed to draw down an income from ONLY one of them (say 3k per annum), which would it be and why.

tacpot12

Withdraw from the ISA as it is not income, so there is no tax to pay. Withdrawing from the SIPP will lead you to paying income tax on at least 75% of what you withdraw.

NottinghamKnight

As ever it depends on your wider situation. If you aren't utilising your personal allowance then there wouldn't be tax to pay for example.

Linton

If your total income requirements were greater than the basic rate tax band and you had a large SIPP it could make sense to withdraw sufficient from your SIPP to just keep within basic rate and take the extra from your ISA.  If you took all the money from your ISA there would be a danger that in later years you will have emptied your ISA and so be subject to higher rate tax.

So choosing SIPP vs ISA income is just part of your overall retirement strategy.  It is not something you can decide in isolation.

aroominyork

Linton said:

If your total income requirements were greater than the basic rate tax band and you had a large SIPP it could make sense to withdraw sufficient from your SIPP to just keep within basic rate and take the extra from your ISA.  If you took all the money from your ISA there would be a danger that in later years you will have emptied your ISA and so be subject to higher rate tax.

So choosing SIPP vs ISA income is just part of your overall retirement strategy.  It is not something you can decide in isolation.

Or, if your total income requirements were not much greater than the personal allowance/nil rate tax band, it could make sense to withdraw sufficient from your SIPP to just keep within nil rate and take the extra from your ISA.

dunstonh

stephenadarglas said:

If you had 100k in a SIPP and 100k in an ISA and you needed to draw down an income from ONLY one of them (say 3k per annum), which would it be and why.

Insufficient information to answer.   What is the tax position now and in the future (when mapped over life expectancy?   Is your estate likely to be subject to IHT?
As it stands, either could be viable based on the limited information you have given.

stephenadarglas

dunstonh said:

stephenadarglas said:

If you had 100k in a SIPP and 100k in an ISA and you needed to draw down an income from ONLY one of them (say 3k per annum), which would it be and why.

Insufficient information to answer.   What is the tax position now and in the future (when mapped over life expectancy?   Is your estate likely to be subject to IHT?
As it stands, either could be viable based on the limited information you have given.

I would pay 20% tax on the Sipp as I have my 12.5 k allowance on my DB pensions.  Not yet accessing SP and unlikely to pay IHT.