Is withdrawing from one pension and then depositing to another pension and getting 20% topup poss?

sgx2000

molerat said:

Same each year. Some you have to keep a nominal amount in to keep open

When I first got paid from my DB pension it was set as emergency tax code...
Is this likely to happen again?
As I currently also work.  but obviously HMRC would then contact my employer and my current pension provider and change the tax code with them also.... 

Yes I know this is easily sorted with a phone call to HMRC or online... But a bit of a faffle....

molerat

The first withdrawal will be taxed at 1257LX which if you are already using up your tax allowance is incorrect.  The way round this is to take a small withdrawal which will trigger HMRC to allocate a tax code. Whether they change your employment code depends on your personal situation. You then take the rest according to your taxation status.  MrsM has a numerical tax code allocated so to ensure the correct tax is deducted she takes it all in M12 (she also pays in later in the year), I have BR so take it at the start of the year.

Audaxer

sgx2000 said:

JGB1955 said:

sgx2000 said:

Audaxer said:

izawa said:

Even though the person withdraws from another pension? To put into another pension?

Even in the same pension. Many people on here pay in £2,880 to a SIPP, leave as cash and once the tax relief is added withdraw £3,600 and repeat the process each tax year. There is a very long thread on the subject in this forum:
Paying £2880 into pension when retired — MoneySavingExpert Forum

But don't you then lose 20% of the £3600 to tax?

25% of it will be paid tax free, so only £2,700 is taxable.

So.. a lot of messing to gain £180???  minus any fee's from the second sipp??

£180 profit if paying basic rate tax or £720 profit for those for those with enough unused personal tax allowance.

There are no fees with at least one SIPP provider.

bluenose1

My husband has retired and has done this twice now for the £180, only took a few minutes to open and deposit an HL SIPP.

It says on their website the date it gets topped up by HMRC so you can figure out earliest you can withdraw.
He then contacted them to withdraw, and had a 5 minute chat where they asked the standard questions to the risk involved. They suggested he withdrew as a small pot, and sent him the forms to sign. He had to send a copy of his passport as proof of ID.
He withdrew it all , they paid it into his bank account, closed the account and he then reopened in new tax year with his next £2880. 

No more than an hours work for £180. I know you can do it online totally but I had some issues in doing mine so we thought it may be quicker  to ring. They are very efficient and helpful. For the second withdrawal as they already had his passport details that was no longer required,

sgx2000

bluenose1 said:

My husband has retired and has done this twice now for the £180, only took a few minutes to open and deposit an HL SIPP.

It says on their website the date it gets topped up by HMRC so you can figure out earliest you can withdraw.
He then contacted them to withdraw, and had a 5 minute chat where they asked the standard questions to the risk involved. They suggested he withdrew as a small pot, and sent him the forms to sign. He had to send a copy of his passport as proof of ID.
He withdrew it all , they paid it into his bank account, closed the account and he then reopened in new tax year with his next £2880. 

No more than an hours work for £180. I know you can do it online totally but I had some issues in doing mine so we thought it may be quicker  to ring. They are very efficient and helpful. For the second withdrawal as they already had his passport details that was no longer required,

Money spending expert.....lol

thanks to everyone for the info..

sgx2000

So.  If I paid in £20k  (the lump from my 1st pensio that started paying 30 months ago)
Would that trigger recycling rules?
Or would this just be taken as anyone starting a new sipp?

Linton

sgx2000 said:

So.  If I paid in £20k  (the lump from my 1st pensio that started paying 30 months ago)
Would that trigger recycling rules?
Or would this just be taken as anyone starting a new sipp?

Other than under the £2880/£3600 allowance, you cannot contribute more than your earnings to your pensions in a single tax year and get the tax refund.  Pension income is not "earnings".

sgx2000

Linton said:

sgx2000 said:

So.  If I paid in £20k  (the lump from my 1st pensio that started paying 30 months ago)
Would that trigger recycling rules?
Or would this just be taken as anyone starting a new sipp?

Other than under the £2880/£3600 allowance, you cannot contribute more than your earnings to your pensions in a single tax year and get the tax refund.  Pension income is not "earnings".

I am still working.
So my employer pays £3200 into my workplace pension
I earn £37k
So in theory i could pay up to £33,800 into a sipp and the government would top this up by 25% ???

zagfles

sgx2000 said:

Linton said:

sgx2000 said:

So.  If I paid in £20k  (the lump from my 1st pensio that started paying 30 months ago)
Would that trigger recycling rules?
Or would this just be taken as anyone starting a new sipp?

Other than under the £2880/£3600 allowance, you cannot contribute more than your earnings to your pensions in a single tax year and get the tax refund.  Pension income is not "earnings".

I am still working.
So my employer pays £3200 into my workplace pension
I earn £37k
So in theory i could pay up to £33,800 into a sipp and the government would top this up by 25% ???

No. You could only pay £29600, assuming £37k is your taxable income after any workplace pension conts taken off and you have at least £200 carry forwards available. Your employer contributions are irrelavent for the tax relief limit. They do count for the AA, so your total pension input would be just over £40k so you'd need a bit of carry forwards.

Jaynishriya

zagfles said:

sgx2000 said:

Linton said:

sgx2000 said:

So.  If I paid in £20k  (the lump from my 1st pensio that started paying 30 months ago)
Would that trigger recycling rules?
Or would this just be taken as anyone starting a new sipp?

Other than under the £2880/£3600 allowance, you cannot contribute more than your earnings to your pensions in a single tax year and get the tax refund.  Pension income is not "earnings".

I am still working.
So my employer pays £3200 into my workplace pension
I earn £37k
So in theory i could pay up to £33,800 into a sipp and the government would top this up by 25% ???

No. You could only pay £29600, assuming £37k is your taxable income after any workplace pension conts taken off and you have at least £200 carry forwards available. Your employer contributions are irrelavent for the tax relief limit. They do count for the AA, so your total pension input would be just over £40k so you'd need a bit of carry forwards.

My partner is close to approaching retirement, so making large contributions to AVC linked to her DB pension. As the deductions are made from her gross earnings, her taxable income for this tax year will be reduced to just about 1K but she has been making small monthly contributions to her SIPP as well. She expects to claim her DB pension (along with the AVC tax-free) upon retirement but leave the SIPP invested.

Should she be careful not to add more than £1k this tax year into her SIPP? Or is she entitled to add up to the maximum allowance of £2880 and get tax relief on that?