SIPP advice for a non tax payer over 55.

RG2015

where_are_we said:

RG2015 - From 2015 - 2016 tax year onwards my OH contributed £2880 each year into her HL SIPP and after HMRC added £720 tax relief making her balance up to £3600, she withdrew £3550 (UFPLS) to leave a minimum £50 balance in her SIPP to carry on until the next year. Your wife will have to claim back tax in her first year using a UFPLS of £3550 but in subsequent years she will have a tax code for her SIPP. There are ways of avoiding paying too much tax in your first year eg contributing a regular monthly payment of 1/12 of £2880?

Remember there is a "use it or lose it" element to making a £3550 withdrawal each tax year your wife does not pay tax on her income. Is there a reason not to accept risk free gain of almost 25% each tax year?

When your wife becomes a tax payer eg when she reaches state pension age or an occupational pension kicks in the the benefit is greatly reduced to just over 6%. Then it is time to consider your options. When my OH started to pay tax she decide to stop making any withdrawals and invest (she transferred her SIPP from HL to Vanguard for lower charges), the advantage being SIPP`s are not included in Inheritance tax calculations. House price inflation, freezing of IHT allowances or even changes to the IHT rules could mean you might want to mitigate possible IHT payments by shielding assets by using a SIPP.

I have a question on the uncrystalised status of subsequent year's withdrawals.

I understand that in the first year, UFPLS is self-explanatory. However are withdrawals in subsequent made under a different method as I imagine that the term uncrystalised would no longer apply?  

ColdIron

RG2015 said:

where_are_we said:

RG2015 - From 2015 - 2016 tax year onwards my OH contributed £2880 each year into her HL SIPP and after HMRC added £720 tax relief making her balance up to £3600, she withdrew £3550 (UFPLS) to leave a minimum £50 balance in her SIPP to carry on until the next year. Your wife will have to claim back tax in her first year using a UFPLS of £3550 but in subsequent years she will have a tax code for her SIPP. There are ways of avoiding paying too much tax in your first year eg contributing a regular monthly payment of 1/12 of £2880?

Remember there is a "use it or lose it" element to making a £3550 withdrawal each tax year your wife does not pay tax on her income. Is there a reason not to accept risk free gain of almost 25% each tax year?

When your wife becomes a tax payer eg when she reaches state pension age or an occupational pension kicks in the the benefit is greatly reduced to just over 6%. Then it is time to consider your options. When my OH started to pay tax she decide to stop making any withdrawals and invest (she transferred her SIPP from HL to Vanguard for lower charges), the advantage being SIPP`s are not included in Inheritance tax calculations. House price inflation, freezing of IHT allowances or even changes to the IHT rules could mean you might want to mitigate possible IHT payments by shielding assets by using a SIPP.

I have a question on the uncrystalised status of subsequent year's withdrawals.

I understand that in the first year, UFPLS is self-explanatory. However are withdrawals in subsequent made under a different method as I imagine that the term uncrystalised would no longer apply?  

With UFPLS you take money from the uncrystalised pot and there is no crystalised pot as you didn't use drawdown

Next year's contributions (and any residual money not taken with UFPLS) would also be uncrystalised