AJ Bell Drawdown

DairyQueen

I am initiating drawdown from my AJ Bell SIPP tomorrow. Currently 100% uncrystallised. AJB do not support monthly UFPLS so I am hoping to do an annual partial crystallisation taking 25% tax free up front each April plus 12 x monthly payments of the crystallised balance (flexi access drawdown?).

1)    Could someone familiar with AJB please advise whether they offer this method of drawdown?

2)    If so, can it be set-up online or do I need to call them?

I wish to take the entire sum tax free. With that in mind is the following accurate?:

Tax Code 22/23 currently 1154L as HMRC have deducted an amount for savings interest of £1,030. I assume that if I am taxed because of this deduction then I can claim it back or wait for an auto refund (next year)? 

Carer Allowance (taxable) 22/23 = £3,624 and no other taxable income.

Crystallise  £11,500 = £2875 tax free lump sum plus £8625 taxable. 

£8,625 + £3,624 (carers) = £12,249. Within the personal allowance and therefore all tax free.

Monthly regular payment = £719 (£8625/12)

Is my maths correct?

TIA

xylophone

https://www.youinvest.co.uk/faq/do-i-have-move-all-my-funds-drawdown-same-time

https://www.gov.uk/tax-codes

Dazed_and_C0nfused

Tax Code 22/23 currently 1154L as HMRC have deducted an amount for savings interest of £1,030. I assume that if I am taxed because of this deduction then I can claim it back or wait for an auto refund (next year)? 

That will be because you have unused Personal Allowances which are going to be used by the interest.

If you update your estimated AJ Bell pension income (after they have reported the first taxable payment to HMRC) this will, if necessary, be recalculated by HMRC.

If your pension income uses all of your Personal Allowance your interest will become taxable under the savings starter rate (0%) so won't be a deduction in your tax code.

DairyQueen

Dazed_and_C0nfused said:

Tax Code 22/23 currently 1154L as HMRC have deducted an amount for savings interest of £1,030. I assume that if I am taxed because of this deduction then I can claim it back or wait for an auto refund (next year)? 

That will be because you have unused Personal Allowances which are going to be used by the interest.

If you update your estimated AJ Bell pension income (after they have reported the first taxable payment to HMRC) this will, if necessary, be recalculated by HMRC.

If your pension income uses all of your Personal Allowance your interest will become taxable under the savings starter rate (0%) so won't be a deduction in your tax code.

Thanks for this @Dazed_and_C0nfused . Do you know whether I can call HMRC and advise them of pension income for 2022/23 before a tax code is issued to AJB?

Dazed_and_C0nfused

Not if this will be the first payment.

HMRC will only update things that exist, not those which might exist.  If everyone who applied for a job or thought of commencing a pension wanted these non existent income source updating I guess it wouldn't take long for things to get in a pickle.  

You need to wait for AJ Bell to file the first Real Time Information report for this pension and then you can update your expected (taxable) pension income.

SouthCoastBoy

Not sure if this helps in your case, but in the past I have informed HMRC of an incorrect tax code using the following link, https://www.gov.uk/government/organisations/hm-revenue-customs/contact/income-tax-enquiries-for-individuals-pensioners-and-employees

You will need a gateway account

SouthCoastBoy

To help alleviate the issue of tax codes being incorrect etc. I am planning to drawdown once a year at the end of March, then complete self assessment asap (e.g. end of May)

DairyQueen

xylophone said:

https://www.youinvest.co.uk/faq/do-i-have-move-all-my-funds-drawdown-same-time

https://www.gov.uk/tax-codes

Thanks @xylophone. Wasn't sure if they allowed monthly drawdown following a partial crystallisation. I have just initiated and option is available.

For others' info. AJB provide no confirmation of drawdown request via online system or via email. Nor is the required illustration produced and available in 'Documents' as online system states. This creates a kind of 'limbo' leaving the customer wondering whether drawdown has been correctly requested. System states that they will send a letter/email once request has been processed. This will take 5-10 days plus another 3-5 days to process the TFC payment via BACS. 

I am expecting the TFC around the end of April and the first regular payment 10th May.

Thrugelmir

Nothing unusual. My provider operates a system similar to that of processing a normal payroll. A deadline for submitting a request, a deadline for having the neccessary cash available. Then a fixed payment date every month. There's no requirement for constant updates. Always runs smoothly. 

DairyQueen

SouthCoastBoy said:

Not sure if this helps in your case, but in the past I have informed HMRC of an incorrect tax code using the following link, https://www.gov.uk/government/organisations/hm-revenue-customs/contact/income-tax-enquiries-for-individuals-pensioners-and-employees

You will need a gateway account

Yes, thanks. I have a gateway a/c and think the system allows new income sources to be added but no facility to amend savings interest. HMRC are currently deducting savings interest I accrued in tax year 20/21 from my 22/23 personal allowance.  I didn't use all of my personal allowance last tax year.

DairyQueen

SouthCoastBoy said:

To help alleviate the issue of tax codes being incorrect etc. I am planning to drawdown once a year at the end of March, then complete self assessment asap (e.g. end of May)

That makes sense.

Issue I have is that I would need to use savings to fund income from now until March 2023. I couldn't drawdown in March 2022 without exceeding personal allowance  (I had earnings from employment in tax year 21/22).

We are just about to kick-off a building project that is costing an arm, a couple of legs, and several toes. It could also need a few fingers by the time the builder has completed imposing inflation increases. What looked like a nice cash buffer last year is likely to reduce at an alarming rate. I don't want to use any of our unwrapped for income this year. 

Our timing is rubbish.