Moving LISA to SIPP/AVC

seans_elysees

I posted this on the ISA forum but think it’ll get more traction here possibly. 

I’m 41 (m) and opened a LISA before the age cutoff, just to ensure I had flexibility of having one if it turned out to be of use. 

It only has approx. £1200 in it and is sitting kind of redundant for me, given I can make much more tax saving by paying AVC’s to my pension at a saving of 42% tax which far outweighs the LISA benefits. 

What I’m now wondering is - am I best to just withdraw my LISA, take the 25% withdrawal hit - which would allow me excess cash to be able to up my AVC contributions by an equivalent amount. That 42% saving would make up for the LISA withdrawal penalty. 

Does that make sense or am I missing anything else? 

Is there any other reason that makes retaining the LISA worthwhile? 

Albermarle

If you will be a basic rate taxpayer when you withdraw from the SIPP, you will effectively pay 15% tax ( although you will still have your personal allowance so it maybe less) If you were a 40% taxpayer it would be more.
Withdrawals from  a LISA are tax free after age 60.

seans_elysees

Albermarle said:

If you will be a basic rate taxpayer when you withdraw from the SIPP, you will effectively pay 15% tax ( although you will still have your personal allowance so it maybe less) If you were a 40% taxpayer it would be more.
Withdrawals from  a LISA are tax free after age 60.

Thank you.  I’d forgotten about the tax aspect of it coming out of SIPP compared to the tax-free LISA.