Savings interest and payments from SIPPs

Doctor_Who

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
i wouldnt need to take a 25% tax free lump sum from my sipp

Monthly UFPLS can be heavy on the admin depending on your provider. I use UFPLS with II and make one withdrawal per year after 6th March - not sure I'd want to do that every month!

dunstonh

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
i wouldnt need to take a 25% tax free lump sum from my sipp

For info only,  regular monthly UFPLS is the most common method of drawdown I use.      It gives the benefit of monthly income but with each payment split 75/25.       

However, that option doesn't appear to be widely supported with DIY providers.  So, it can be necessary for DIYers to use ad-hoc lump sums (say once a year) and put the lump sum in a savings account and then draw from that monthly and replenish it again in the next tax year.

Stargunner

ColdIron said:

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

With flexi access drawdown I thought that I would need to take the 25% tax free lump up front, which I dont want to do. I think this would be better suited on the pension forum.

ColdIron

Yes you're right, see dunstonh's post above. It will depend upon your pension provider

Stargunner

ColdIron said:

Yes you're right, see dunstonh's post above. It will depend upon your pension provider

It is with HL I will need to investigate if they offer regular monthly UFPLS. If not how regularly I can take lump sums. Or even look at alternative platforms that offer regular monthly UFPLS

ColdIron

Stargunner said:

ColdIron said:

Yes you're right, see dunstonh's post above. It will depend upon your pension provider

It is with HL and I believe  that they offer regular monthly UFPLS. 

I am certain that they don't. You would need to make an ad hoc request each month, or request it less frequently

That's much more admin than I'm willing to take on

You don't need to crystallise it all in one go for UFPLS or drawdown. You could do it in stages, annually or whatever

dealyboy

For those still investing (25% or more tax relief!) an occasional PCLS + FAD may be preferred to UFPLS.

Julezy101

Doctor_Who said:

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
i wouldnt need to take a 25% tax free lump sum from my sipp

Monthly UFPLS can be heavy on the admin depending on your provider. I use UFPLS with II and make one withdrawal per year after 6th March - not sure I'd want to do that every month!

Does this avoid getting an emergency tax code and all that nonsense as you are making just the one withdrawal in the final month of the FY? Or do you have to still do a small withdrawal beforehand of say £100 in one of the previous months in that FY?

Doctor_Who

Julezy101 said:

Doctor_Who said:

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
i wouldnt need to take a 25% tax free lump sum from my sipp

Monthly UFPLS can be heavy on the admin depending on your provider. I use UFPLS with II and make one withdrawal per year after 6th March - not sure I'd want to do that every month!

Does this avoid getting an emergency tax code and all that nonsense as you are making just the one withdrawal in the final month of the FY? Or do you have to still do a small withdrawal beforehand of say £100 in one of the previous months in that FY?

No, the emergency tax code is because the pension provider doesn't have an up to date tax code. Taking a small UFPLS (less than ~£1K, £750 taxable) triggers HMRC to issue the provider with an up to date code. It all happened within a couple of days for me. The reason for leaving the annual UFPLS until after 6 March (but before 5 April) is to have all of the available personal allowance and tax bands to use. If you made the withdrawal after 6 April you would only have 1/12 of each, much like you do when paid monthly via PAYE.

dunstonh

Julezy101 said:

Doctor_Who said:

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
i wouldnt need to take a 25% tax free lump sum from my sipp

Monthly UFPLS can be heavy on the admin depending on your provider. I use UFPLS with II and make one withdrawal per year after 6th March - not sure I'd want to do that every month!

Does this avoid getting an emergency tax code and all that nonsense as you are making just the one withdrawal in the final month of the FY? Or do you have to still do a small withdrawal beforehand of say £100 in one of the previous months in that FY?

Regular monthly UFPLS does stabilise the tax and avoid overpayments of tax that can occur with single UFPLS.  That is because with regular UFPLS, there is a payment in each of the 12 payroll periods.   Whereas single premium will be over taxed in all months other than month 12.        The small withdrawal in payroll period 12 is what some people do to avoid the need to claim tax back when they use the single payment method.