UFPLS or Drawdown

Doctor_Who

My UFPLS withdrawals from II come with payslips that state the pay date and the pay period.......month 12 for post 6th March/pre 5th April. Hence I think one off UFPLS works through payroll just like drawdown does.

molerat

UFPLS payments are payrolled, the same as any other payment.  The only different one would be the first which would use a 1257LM1 tax code but still payrolled.  Once that one is out of the way and a code issued it is just a case of knowing your tax allowance / 12 x M to figure out what you can take at any point in the year.  HL use a paper system so usually apply on line around third week in Feb so the form is received and ready to send off a couple of days before 6th Mar.

Doctor_Who

molerat said:

UFPLS payments are payrolled, the same as any other payment.  The only different one would be the first which would use a 1257LM1 tax code but still payrolled.  Once that one is out of the way and a code issued it is just a case of knowing your tax allowance / 12 x M to figure out what you can take at any point in the year.  HL use a paper system so usually apply on line around third week in Feb so the form is received and ready to send off a couple of days before 6th Mar.

Interesting regarding HL. Interactive Investor UFPLS is done completely online, which I complete ~7-8th March and the money has been in my current account ~10 days later.

Albermarle

Doctor_Who said:

molerat said:

UFPLS payments are payrolled, the same as any other payment.  The only different one would be the first which would use a 1257LM1 tax code but still payrolled.  Once that one is out of the way and a code issued it is just a case of knowing your tax allowance / 12 x M to figure out what you can take at any point in the year.  HL use a paper system so usually apply on line around third week in Feb so the form is received and ready to send off a couple of days before 6th Mar.

Interesting regarding HL. Interactive Investor UFPLS is done completely online, which I complete ~7-8th March and the money has been in my current account ~10 days later.

I think there is a gradual move of SIPP providers to more on line systems, so we are in a kind of transition period. Not sure if the big traditional insurers ( Aviva, Scottish Widows etc ) are doing the same .

For example Fidelity used to insist on a detailed phone chat before withdrawals could start and they had a partly paper process, but I received this message from them in October.

We're always looking to improve the services we provide. Having listened to customers, you now have a couple of options when you're ready to access your pension.

You can either call our retirement service team.

Or, you can apply online to drawdown funds from your pension. This gives you even more flexibility, choice and convenience when taking income from your savings.

Dazed_and_C0nfused

The tax months run from 6 of one month to the 5 of the following month, for example 6 March to 5 April.

What matters is the payment date the pension company record in their payroll software.

If it's 5 March then that is month 11.   If it's 6 March it's month 12.  

No idea how quickly different pension companies can react to client requests but if I was initiating a taxable payment today I wouldn't expect it to be in month 7 (6 October to 5 November).

MK62

Doctor_Who said:

My UFPLS withdrawals from II come with payslips that state the pay date and the pay period.......month 12 for post 6th March/pre 5th April. Hence I think one off UFPLS works through payroll just like drawdown does.

I expect pretty much all payments will go through payroll.......it's whether the payment has been processed and sent to the payroll dept before the cut off date. Standard Life took over 3 weeks to process my annual payment this year, and over 4 weeks to payout (it comes in two seperate payments, TFC first, followed by the taxed main payment several days later)......that was in the July/August timeframe......it might take even longer in March, the final few weeks of the tax year. Whether SL would "backdate" any payments to keep them in the tax year, I'm not sure...personally I wouldn't want to test that. Up to 2022 I was using HL for my annual withdrawal, they were quicker, but then so were SL last year....all I'm saying is that if I was going to leave my annual pension payment until month 12 of the tax year, I'd want to be very sure that my pension provider would process the claim in time.

dealyboy

Just for information ...

In the case of AJ Bell an UFPLS can be requested online but is processed manually about 7 days later, this is the payment date when funds are drawn.

I had a long conversation with the man in the 'Benefits' team who does PCLS (same day), single FAD and UFPLS. He has some flexibility to bring forward the date on request.

Note: this was as of January 2023 when I spoke to him, things may have changed now.

Steve_s1

Hi all, I'm in a similar situation, aged 55 and looking to start withdrawals from my SIPP (interactive investor) next year and considering whether to use UFPLS or FAD to take say £16,760 tax free (personal allowance + 25% TFC) per year.

I'm currently working and finish at the end of November (this week!). Next year I don't anticipate any other taxable income (I have premium bonds / ISA / wife to supplement my pension income).

I was thinking to start taking from my SIPP in the next tax year, later in April, so I can use all my new £12,570 personal allowance. I understand if I was to take the full £16,760 via UFPLS it would trigger an emergency tax code where HMRC would assume I want to take that amount each month so I would pay way too much tax. To avoid this (and the need to claim it back), some people (e.g. Chris Bourne on YT) recommend initially taking a small nominal amount to trigger HMRC without getting hit with the high tax (withdraw say £1000).

At the end of the day I want to minimize my tax (to make my pension pot last) and also minimize the form-filling / admin, although I realize these 2 things may be mutually exclusive!

Any comments would be appreciated, especially from anyone with ii who knows how this works. Thanks.

molerat

If you have not withdrawn from the pension previously so have no code allocated to it and want to minimise the tax and paperwork then taking a small amount early in the year is a necessary move to get HMRC to allocate a code and give you time to get that code corrected.  That first dip can be up to £1397 with no tax deducted.

Steve_s1

molerat said:

If you have not withdrawn from the pension previously so have no code allocated to it and want to minimise the tax and paperwork then taking a small amount early in the year is a necessary move to get HMRC to allocate a code and give you time to get that code corrected.  That first dip can be up to £1397 with no tax deducted.

OK, thanks.

When you say "early in the year" you mean early in the next financial year (after 6th April)? Previously in this discussion there was talk of taking money towards the end of this financial year, but since I've been earning this year that would mean I'd have to pay tax on any withdrawal if I use UFPLS, if I understand correctly.