Taking money out of SIPP without triggering MPAA?

Marcon

DBdoobydoo said:

If I did trigger the MPAA is the amount I can contribute to a pension limited to £4,000 a year forever or just this tax year? 

Forever, under current legislation. The MPAA kicks in the moment you have 'flexibly accessed' so much as a penny in excess of your tax free cash unless (as suggested above) you go the small pots route.

For anyone thinking about doing something which will trigger the MPAA, be aware that you can pay more than £4K (gross) in the tax year in which you trigger it, PROVIDED that your contribution is made prior to actually triggering the MPAA.

DBdoobydoo

As I am only holding the money in cash it makes sense for me in future to pay money into several SIPPs (assuming the costs are free as with HL) so that I have three small pots of £10,000 that I can access in an emergency should the need arise. I will still give HL a call & see if I can split the current SIPP into two SIPPs of £10,000 ecah.

Albermarle

DBdoobydoo said:

As I am only holding the money in cash it makes sense for me in future to pay money into several SIPPs (assuming the costs are free as with HL) so that I have three small pots of £10,000 that I can access in an emergency should the need arise. I will still give HL a call & see if I can split the current SIPP into two SIPPs of £10,000 ecah.

HL are the only platform normally mentioned who will split a pot in this way for you . Maybe others will, but for sure some will not .
Splitting pots to take  advantage of the small pots rule is probably bordering on the edge of being a bit of a grey area/loophole , so I guess many platforms prefer to steer away from it .

DBdoobydoo

Albermarle said:

DBdoobydoo said:

As I am only holding the money in cash it makes sense for me in future to pay money into several SIPPs (assuming the costs are free as with HL) so that I have three small pots of £10,000 that I can access in an emergency should the need arise. I will still give HL a call & see if I can split the current SIPP into two SIPPs of £10,000 ecah.

HL are the only platform normally mentioned who will split a pot in this way for you . Maybe others will, but for sure some will not .
Splitting pots to take  advantage of the small pots rule is probably bordering on the edge of being a bit of a grey area/loophole , so I guess many platforms prefer to steer away from it .

If I had appreciated the potential problem of triggering MPAA I would have put the money in two separate pots from the start. I opened the SIPP with £16,000 (£20,000 after basic rate tax relief).

OldBeanz

DBdoobydoo said:

Albermarle said:

DBdoobydoo said:

As I am only holding the money in cash it makes sense for me in future to pay money into several SIPPs (assuming the costs are free as with HL) so that I have three small pots of £10,000 that I can access in an emergency should the need arise. I will still give HL a call & see if I can split the current SIPP into two SIPPs of £10,000 ecah.

HL are the only platform normally mentioned who will split a pot in this way for you . Maybe others will, but for sure some will not .
Splitting pots to take  advantage of the small pots rule is probably bordering on the edge of being a bit of a grey area/loophole , so I guess many platforms prefer to steer away from it .

If I had appreciated the potential problem of triggering MPAA I would have put the money in two separate pots from the start. I opened the SIPP with £16,000 (£20,000 after basic rate tax relief).

It is not a problem and you could transfer £10k to another provider with ease.

Malthusian

Albermarle said:

HL are the only platform normally mentioned who will split a pot in this way for you . Maybe others will, but for sure some will not .

HL definitely aren't the only ones. Probably not worth the effort of looking for a cheaper provider who will still offer that facility though. In the OP's position you could just do a partial transfer anyway.

Splitting pots to take  advantage of the small pots rule is probably bordering on the edge of being a bit of a grey area/loophole , so I guess many platforms prefer to steer away from it .

Nah, it's laziness / cost-effectiveness. The OP would be using the small pot rules in the spirit they were written and for their intended purpose - to make a relatively small withdrawal without triggering the disproportionate consequences of the MPAA.

There's no "general anti avoidance" to worry about here - you still pay tax on a small pot withdrawal, and retaining the right to make tax-relieved pension contributions is not tax avoidance, it's tax deferral.