Decisions Decisions

MissHap

Your right of course, as of the next tax year I WILL pay some tax on my state pension, which means I cant withdraw a top up from my SIPP, albeit was only a around £1000, it felt like I was on the winning side for once, lol.
I'm maxed out on a cash ISA so cant utilise that and weirdly I seem OK paying additional tax on interest accrued elsewhere over the £1000 limit, I think its because its not on the capital.

Altior

Psychologically yes! I suspect the fully tax free withdrawal ship has sailed. Unless a new parliament does something radical, which seems unlikely.  

where_are_we

The ship hasn`t entirely sailed. You could defer your state pension (that is if you haven`t already done it once) for a couple of tax years and make a large tax free withdrawal in those tax years from your SIPP pot to bring you up to your personal tax allowance currently £12570. The efficacy of doing this depends on your financial position. There are some things to look out for eg benefit, inheritance tax etc

MissHap

Great idea where-are-we, unfortunately I took my state pension 5 years ago.

MissHap

Sat here thinking about your suggestion where-are-we......................it doesn't really change your overall tax burden over the years.
OK, you wont pay tax on your lump sum SIPP withdrawal if you keep it under the £12570 but you will pay it at the other end when you restart claiming your deferred pension.

goodValue

You can STOP taking your pension after you start receiving it. (Link below).

I don't know if it will improve your tax situation, but it will give you the benefit of an increased pension when you start taking it again.

https://www.moneyhelper.org.uk/en/pensions-and-retirement/state-pension/putting-off-your-state-pension

Ivkoto

This will answer some questions


https://youtu.be/NZ46g0UlvOU?si=oCEORNCC0XYv5C8z

MissHap

Great video Ivkoto, explains a lot!

Altior

where_are_we said:

The ship hasn`t entirely sailed. You could defer your state pension (that is if you haven`t already done it once) for a couple of tax years and make a large tax free withdrawal in those tax years from your SIPP pot to bring you up to your personal tax allowance currently £12570. The efficacy of doing this depends on your financial position. There are some things to look out for eg benefit, inheritance tax etc

If the maximum that can be taken in a tax year without being taxed is £12570, it doesn't matter how long it will be deferred. Unless the legislation changes. Just means that pension income is liable to material tax rather than sipp drawn. That's why I'd say the ship has sailed.

The optimum time to withdraw SIPP funds that will be taxed at the marginal rate is when you have no other income and no right to the state pension. Of course that doesn't even consider the possible downside of sudden illness or the worst. The index linking is a benefit, but just means a bigger slice will be taxed. 

MissHap

Altior, your right..............I retired early at 61 and withdrew from a variety of pension resources up to the maximum personal tax allowance, around £50k over the 4 year period, and took my state pension at 65, topping up from my SIPPs to the maximum personal tax allowance.
The static personal allowance means state pension increases have now caught up so I'll leave my SIPPs alone now and look to invest them elsewhere.
I'm confident I wont need to access them in the near future, if ever, so it could be just a windfall for the family If/when the grim reaper comes a 'nockin.
Puts my ambition of dying with £1 in the bank in jeopardy though!