Move ISA into new SIPP - is it worth it ?

Clare43

Hi, 

I have an ISA with Fidelity which contains funds I held with LG prior to them being transferred ( have made a couple of changes since the transfer ).  Value approx £70,000.   I am wondering if it may be beneficial to transfer the ISA to a SIPP with fidelity as I am assuming I’d qualify for tax relief on the payment into the new SIPP ?  The only possible negative I can see if I can access the ISA at any point but couldn’t access the SIPP until I’m 55 - in 6 years time. As things stand this wouldn’t be an issue.  Am I missing anything ?    Thank you for any advice 😊 

eskbanker

Do you have enough earned income, and carry-forward allowance, to support a £70K contribution into a SIPP?

Clare43

I think so.   Currently working in NHS as a nurse and salary covers the bills.  I’ve got some money in bank account I can access if needed.  Currently looking into early retirement after I turn 50 and waiting for estimate on figures for this but it’s not a definite plan.  Also have another SIPP with standard life I’ve had for a while now, plus an endowment ( I think ) that I’ve had with Avila  since  my teens. 

Notepad_Phil

I think you may have misunderstood eskbanker - he meant is your income £70k. Your earned income in this financial year needs to be at least as high as the contribution you wish to make to receive tax relief.

QrizB

Clare43 said:

I think so.   Currently working in NHS as a nurse and salary covers the bills.

So you're expecting to earn £70k this year, after tax?

Or, if you'd rather split it over two years, £35k this tax year and £35k next?

Dazed_and_C0nfused

A £70k payment from you is a gross contribution of £87,500.

Ignoring any complications with calculating the DB element of your annual allowance do you expect to earn £87,500 in the tax year you will make the contribution?

MX5huggy

If you are a high wage NHS earner is your expected NHS pension £50k or more so getting close the Life Time Allowance when multiplied by 20.

Alice_Holt

This explains the maximum amount you can put into a pension in the tax year:
https://www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/the-annual-allowance

To transfer the total £70k plus tax uplift it's likely you would need to spread the contributions over 3 tax years.

Include the workplace pension contributions when calculating your maximum contribution amount.


In principle seems a good idea, but note the potential restrictions for future pension contributions if you withdraw monies at age 55.
https://www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/money-purchase-annual-allowance-mpaa

Clare43

Notepad_Phil said:

I think you may have misunderstood eskbanker - he meant is your income £70k. Your earned income in this financial year needs to be at least as high as the contribution you wish to make to receive tax relief.

Hi, yes I did misunderstand.  My income is around £25000 a year. 

Clare43

Dazed_and_C0nfused said:

A £70k payment from you is a gross contribution of £87,500.

Ignoring any complications with calculating the DB element of your annual allowance do you expect to earn £87,500 in the tax year you will make the contribution?

Definitely not.  

Clare43

MX5huggy said:

If you are a high wage NHS earner is your expected NHS pension £50k or more so getting close the Life Time Allowance when multiplied by 20.

I’m not a high wage earner.  Just a staff nurse earning around £25000 a year