25% lump sum > 2nd pension

slider09

Hi
If you take your 25% tax free lump from your pension at the age of 55. What is to stop you investing a portion of this into a second pension and getting tax relief on this payment?

Thanks

anselld

Nothing so long as the amount does not exceed your earned income and annual allowance.
In some cases the rules on recycling may apply ...
https://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/pensions-and-tax/pension-lump-sum-recycling

Vasquez65

As I understand it , You can pay 30% (including the tax relief) of the sum withdrawn back in within 2 years from the tax year you withdrew.  After that you are free to top up the whole amount,  at least that’s what I’ve read - hmrc can check a period of 5 years - two years before the tax year in which you withdraw, the current year and two years afterwards - to check if recycling the cash was pre-planned. 

I’m in the situation of having to withdraw £20k tax free from my sipp - so crystalising £80k of it, but then within weeks/months,  I will have 50% of the proceeds of a house sale.   

So I withdraw this tax year,  will top up my wife’s SIPP before April,  then feed 30% back to mine in 21-22/22-23. 

Albermarle

As mentioned you need to be earning sufficient taxable income to claim tax relief , regardless of the original source of the money . For example if your wife was not earning then the max you can add is £2880 .
In principle/morally some would say ,  you should not use tax free cash cash from your pension to gain more tax relief .
Legally you are allowed as long as you stay within the recycling rules and you have the taxable income to cover it.