Txfer S&S ISA to SIPP?

RebTech

I'm single, 70m, retired and a nontaxpayer, income of about £700 SP and £150 monthly occupational pension, don't own property, rent privately.

I have about £65k in a SIPP and £15k in an S&S ISA. I'm wondering if it makes sense to transfer the allowed amount of about £2.8k from ISA to SIPP this year and maybe the same again after April. I've taken UFPLSs from the SIPP but not this year. I know I can't do it direct, it will have to go via cash.

There are health concerns currently being investigated, I'll probably buy an annuity after the diagnosis is known. I believe I'll use the full SIPP for that, not taking a tax free sum as I have the ISA.

The obvious question is the balance between SIPP/annuity and ISA but is there anything else I need to consider?

dunstonh

Bed & pension is a routine transaction, even from ISAs.

There are health concerns currently being investigated, I'll probably buy an annuity after the diagnosis is known. I believe I'll use the full SIPP for that, not taking a tax free sum as I have the ISA.

Not taking the tax free cash is usually a bad idea financially.    If you can get double digits on the annuity rate, then maybe it becomes viable but otherwise, you are usually best taking the 25%.

RebTech

dunstonh said:

If you can get double digits on the annuity rate, then maybe it becomes viable but otherwise, you are usually best taking the 25%.

Sorry but this puzzles me. It seems to assume a very good return from investing the TFLS. What am I missing?

Also, can I put the TFLS in an ISA?

dunstonh

Sorry but this puzzles me. It seems to assume a very good return from investing the TFLS. What am I missing?

You are forgetting 
a) tax.  The annuity is 100% taxable.   
b) giving up the capital and losing the return on that capital.   You will probably find that unless the annuity rate is significantly higher than interest rates, then it wont be viable.

Also, can I put the TFLS in an ISA?

yes

RebTech

dunstonh said:...

Thanks a lot for your replies so far, extremely helpful.

It seems obvious to me I should do the £2.88k ISA->SIPP transfer each year I still have the SIPP for the sake of the "tax refund" (but maybe I'm missing something). Does pension income count as earnings for carry forward purposes? (I'm guessing not.)

ColdIron

No it doesn't and you would need earnings of over £60,000 to exhaust this year's allowance before you could use it

NoMore

Not sure how long you are planning adding to the SIPP but be aware that you will no longer receive tax relief after age 75

Secret2ndAccount

Yes, pay in the 2880 now, and then again after Apr 6. This makes the SIPP as big as possible before you go for an annuity. The 2 x 720 top ups are free money.
When you take out an annuity, it's usual to do it with 75% of your SIPP, and take the 25% lump sum. Otherwise you lose the tax-free benefit of the 25% which is worth quite a lot. It is possible to buy a second annuity, separately, using this 25% cash, but it will be a separate quote and not on the same terms as the primary one. It's a less popular product, and you might not get as good a deal. On the other hand, you pay a bit less tax on the income from this kind of annuity, so it might well work out okay in the end. You are just buying this second annuity with cash (it's called Purchased Life Annuity technically), so you have the option to keep a part of your lump sum and treat yourself to something. Or if you had a lot of savings, you could put a bit more in.