Short term SIPP

Moganner

For my wife, I want to rinse some cash through a SIPP in order to benefit from tax relief - my wife will retire in 2023 or perhaps 2024. Is there a minimum period between getting the tax relief at source (via the SIPP provider) and then drawing down on it? I thought it might be necessary to wait until a new tax year before drawing down but I’ve been unable to find the answer.

Dazed_and_C0nfused

Nope.

But you will need to check provider charges carefully as some don't look too kindly on being used for this specific purpose.

Or at least their charging structures suggests they don't like it.

Marcon

Moganner said:

For my wife, I want to rinse some cash through a SIPP in order to benefit from tax relief - my wife will retire in 2023 or perhaps 2024. Is there a minimum period between getting the tax relief at source (via the SIPP provider) and then drawing down on it? I thought it might be necessary to wait until a new tax year before drawing down but I’ve been unable to find the answer.

Your wife can withdraw her cash as soon as the tax relief has been added. Some providers do this immediately (using their own cash flow resources), others can wait some months until they've actually received the tax being claimed on her behalf and added to her pot.

I don't know what figure she/you have in mind to contribute, but remember that if she takes anything more than the 25% tax free element, she is then limited to a maximum of £4K per year, every year (including the tax relief).

where_are_we

Also calculate how much earned income your wife will have in the tax year 22-23 and 23-24 and 24-25. When she retires will she benefit from a private or a state pension or both? If her pension income plus earned income in a tax year are less than her personal tax allowance of £12570 then she can use a withdrawal from her SIPP to get up to £12570 (assuming she has not transferred her marriage allowance to you). This way she can avoid paying tax on withdrawals from her SIPP. Depending on how much her SIPP is worth and her income you can do this for a number of years.