Savings interest and payments from SIPPs

molerat

Savings interest is reported to HMRC with name, address and NI number if held, they usually data match OK.

Albermarle

Check if you need to send a Self Assessment tax return - GOV.UK (www.gov.uk)

Stargunner

ColdIron said:

lvegas2009 said:

Withdraw 17K from a SIPP as a payment.  25% of this is treated as tax free, so net amount is 12750.  As this is the personal allowance no tax should be due.  (Pension service has advised this seems correct)

The Personal Allowance is £12,570 not £12,750 so you might want to rejig your figures (£16,760) to reach the desired £6,000 but you are on the right track

I will also be looking to use UFPLS, so if i was to take £20k from my sipp per year, £5000 would be tax free, so i would be taxed on £2430 (15000-12570). Does that mean that I would be able to earn £3570 in interest from savings without paying tax.

Dazed_and_C0nfused

Stargunner said:

ColdIron said:

lvegas2009 said:

Withdraw 17K from a SIPP as a payment.  25% of this is treated as tax free, so net amount is 12750.  As this is the personal allowance no tax should be due.  (Pension service has advised this seems correct)

The Personal Allowance is £12,570 not £12,750 so you might want to rejig your figures (£16,760) to reach the desired £6,000 but you are on the right track

I will also be looking to use UFPLS, so if i was to take £20k from my sipp per year, £5000 would be tax free, so i would be taxed on £2430 (15000-12570). Does that mean that I would be able to earn £3570 in interest from savings without paying tax.

Providing you haven't applied for Marriage Allowance then yes.

£2,570 x 0% (savings starter rate)
£1,000 x 0% (savings nil rate)

ColdIron

Assuming no other taxable income and no other factors such as Marriage Allowance that sounds right

Stargunner

ColdIron said:

Assuming no other taxable income and no other factors such as Marriage Allowance that sounds right

I dont reach state pension age for another 6 years and when i retire soon I wont have any other income and have not applied for marriage allowance. Just looking at ways of increasing the interest savings limit over £1000. I dont  need  it as high as £6000 but another £1000 would be helpful

ColdIron

Any reason for using UFPLS over drawdown? There's a lot to be said for a steady income and its simpler taxwise

Dazed_and_C0nfused

Stargunner said:

ColdIron said:

Assuming no other taxable income and no other factors such as Marriage Allowance that sounds right

I dont reach state pension age for another 6 years and when i retire soon I wont have any other income and have not applied for marriage allowance. Just looking at ways of increasing the interest savings limit over £1000. I dont  need  it as high as £6000 but another £1000 would be helpful

You're looking at from the wrong end really.

You cannot benefit from the savings nil rate band until you have used both your Personal Allowance and any available savings target rate band.

So if you have interest of £2k and £2,570 of the savings starter rate band available you wont actually be able to use the savings nil rate band (PSA) as you have insufficient income and the savings nil rate band is last to be used

Stargunner

ColdIron said:

Any reason for using UFPLS over drawdown? There's a lot to be said for a steady income and its simpler taxwise

I wouldnt look to take the £20k in one go, i was considering taking it monthly over the year to give a steady income
i wouldnt need to take a 25% tax free lump sum from my sipp

ColdIron

Stargunner said:

ColdIron said:

Any reason for using UFPLS over drawdown? There's a lot to be said for a steady income and its simpler taxwise

I wouldnt look to take the £20k in one go, i was considering taking it monthly over the year to give a steady income

Then that's (flexible access) drawdown and not UFPLS. A good decision for your, and most people's, needs