CAN I USE MY FULL ANNUAL PENSION ALLOWANCE IF I ONLY WORK 5 MONTHS UNTIL SEPTEMBER

billywhizz1966

Hi All
We are well into plan mode for our stop working and retirement 
My OH has just had her redundancy figures from work with an escape route likely end of June at the latest  - a huge bonus as she was looking to go anyway 
 I thought I might be able to last until December  but her figures make me think I can leave in September allowing me to do the following but need to know it is possible
I earn circa £120k per annum
I currently pay 60% of my salary into a SIPP using unused allowances plus my annual allowance
I am asking could I increase this to 75% from April to 8 September (pro rata will have earned £52k) meaning I can use my full yearly allowance of £40k and in theory not pay too much in tax at all
My question is am I allowed to do this ?
My plan thereafter is to then drawdown the SIPP I have accummalated over the last 2 years at circa £130k by drawing down 25% Tax Free or £32,500 in October 2021 and then start drawing down an annual amount for the next three financial years of £32,500 from 2022/23 onwards.
This will then use up the SIPP in full and I can then access my deferred benefit LGPS pension of £30k per annum from 2025 onwards 
Thanks for reading. Any help appreciated
       
 
 
 

Linton

Yes you can.  The annual allowance  and earned income limits apply to the overall contributions and income in a tax year.

You have checked that this is covered by 4 years £40K annual pension allowances having also allowed for employee and employer pension contributions?

billywhizz1966

Many thanks. Yes the private pension scheme I have sees my employer pay 5% and me 3% in a normal position but having left LG which was a significantly better scheme, the also significantly better salary I now get has allowed me to make such big additional SIPP contributions so hopefully have done the right thing and maximised my tax position and using all the annual allowance for 21/22 and then going seems to make sense (hopefully !)     

jamesd

If you have enough annual allowance unused from previous years you could go up to the 52k of pay. It's easy to reclaim any part that happens to exceed pay, no penalty.

Your remaining plan looks fine.