Move ISA into new SIPP - is it worth it ?

Clare43

Alice_Holt said:

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

Thanks for the useful info.  I’d just had the initial thought of if it might be beneficial to do or not and thought I’d ask for more info / advice. 

QrizB

Clare43 said:

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 

OK, that's fine. If you're 49 now you've got plenty of time to feed money from your ISA into your SIPP. You could transfer, say, £12k a year (which will get £3k tax relief added, making £15k in the SIPP) for the next 6* years.

* Yes, I know 12 x 6 = 72.

Frugalfaffing

Minimum pension age is rising to 57 soon (from 2028 i think) so check if your 55 before then as well. 

jim8888

My only observation would be that once you have the money in your SIPP, you'd only be able to access 25% of it as a tax free lump sum (plus a further £12,540 tax free in any given year.) While it's in an ISA, all of it's tax free, so if you found you wanted all of the money at once to (say) clear a mortgage or buy that Porsche you always wanted, then it's better staying in the ISA. (You could still take all of it in one go out your SIPP, but you'd be taxed on it.)

Notepad_Phil

jim8888 said:

My only observation would be that once you have the money in your SIPP, you'd only be able to access 25% of it as a tax free lump sum (plus a further £12,540 tax free in any given year.) While it's in an ISA, all of it's tax free, so if you found you wanted all of the money at once to (say) clear a mortgage or buy that Porsche you always wanted, then it's better staying in the ISA. (You could still take all of it in one go out your SIPP, but you'd be taxed on it.)

But you will have received tax relief by putting it into the pension, so unless you're in a situation such as only getting 20% tax relief on putting the money in but 40% when you take it out then you will get more out from the pension then from the ISA (assuming same funds and that the charges in the ISA and pension are similar).

jim8888

Notepad_Phil said:

jim8888 said:

My only observation would be that once you have the money in your SIPP, you'd only be able to access 25% of it as a tax free lump sum (plus a further £12,540 tax free in any given year.) While it's in an ISA, all of it's tax free, so if you found you wanted all of the money at once to (say) clear a mortgage or buy that Porsche you always wanted, then it's better staying in the ISA. (You could still take all of it in one go out your SIPP, but you'd be taxed on it.)

But you will have received tax relief by putting it into the pension, so unless you're in a situation such as only getting 20% tax relief on putting the money in but 40% when you take it out then you will get more out from the pension then from the ISA (assuming same funds and that the charges in the ISA and pension are similar).

That's true. If it was me, I'd probably go the SIPP route, but I did wish, when it came to taking my pensions, that I had salted a bit more away into ISA's over the years. It just gives more flexibility and much as I'm grateful for all the "pension freedoms", the rules surrounding them can feel a wee bit restrictive and complicated sometimes.

Clare43

Frugalfaffing said:

Minimum pension age is rising to 57 soon (from 2028 i think) so check if your 55 before then as well. 

I believe the change happens in April 2028 ?    If so I’ll be ok as I’m 55 in the January 

Clare43

jim8888 said:

Notepad_Phil said:

jim8888 said:

My only observation would be that once you have the money in your SIPP, you'd only be able to access 25% of it as a tax free lump sum (plus a further £12,540 tax free in any given year.) While it's in an ISA, all of it's tax free, so if you found you wanted all of the money at once to (say) clear a mortgage or buy that Porsche you always wanted, then it's better staying in the ISA. (You could still take all of it in one go out your SIPP, but you'd be taxed on it.)

But you will have received tax relief by putting it into the pension, so unless you're in a situation such as only getting 20% tax relief on putting the money in but 40% when you take it out then you will get more out from the pension then from the ISA (assuming same funds and that the charges in the ISA and pension are similar).

That's true. If it was me, I'd probably go the SIPP route, but I did wish, when it came to taking my pensions, that I had salted a bit more away into ISA's over the years. It just gives more flexibility and much as I'm grateful for all the "pension freedoms", the rules surrounding them can feel a wee bit restrictive and complicated sometimes

I’ll definitely never be in the 40% tax bracket range