Old Aviva Pension what are my options please

slacko2

Ok am I on the right lines here please ?

Some of my inheritance will land in my account before the 1st of April. We are at the closing of 2023/24 tax year so I am a little unsure what to do.

My only income come 1st April will be PIP which them makes my personal tax allowance for a year £12,570 (18570) Other moneys will go into savings accounts but interest will be below 5000 I think.

As I read it I am allowed to invest £2880 in sipps and the govt then add £720 to this figure totalling £3600 per tax year.  This £2880 should go into a cash sip.

When the full £3600 is totalled in my sip I can withdraw it BUT I should leave £100 in to avoid closure charges.

Do I need a new Sipp every year like an isa or do run with the one I open ?

If I have just the one do I simply put in another £2880 with the £100 I have left behind year after year withdrawing the £3600 when it is available?

Assuming I put in £2880 before end of 23/24 and another beginning 24/25 can you help me with how that might play out.

I am only a little way through that huge sipp thread so will return I am sure.

Thank you

xylophone

https://forums.moneysavingexpert.com/discussion/comment/80678359/#Comment_80678359

If you want to get the relief for the current tax year you will need to open and contribute by 5 April.

You can continue to contribute your £2880 each year to the SIPP up to age 75.

Why not download the HL Guide and read through.

HL  are very helpful on the phone.

Have you contacted Aviva about your current pension?

xylophone

Other posters' comments

https://forums.moneysavingexpert.com/discussion/comment/71859878/#Comment_71859878

https://forums.moneysavingexpert.com/discussion/comment/80678942/#Comment_80678942

After accessing SIPP  year one, anything left in is "crystallised" (so counts as income when you with draw it).

"SIPP year 2" is uncrystallised" so that you can take the 25% PCLS then withdraw the rest as income and so on.

For someone in you position with income below your PA this makes no practical difference but would for somebody liable to tax.

slacko2

Ok £2880 into sipp before April 5

£2880 into Sipp beginning of new tax year

Once first payment is made up by government take it our and invest elsewhere.

When second payment is made up by government I can also take that out leaving a holding balance to keep account open. In this case the HMRC may tax me but I could reclaim the deduction due to my PA

Am  thinking correctly now ??

xylophone

When you withdraw the whole amount, 25% is paid tax free but the balance may be taxed because it is treated by the provider as if you were going to withdraw that amount every month of the year.

You can reclaim the overpaid tax.

slacko2

At last I have it

Rather than take the second lump out as one draw and taking into account your last post would the alternative be to draw it off monthly and put it into a regular saver. Would this then mean I would not be left having to claim the tax back ?

Does this make financial sense ?

Thank you Xylophone you have been a absolute diamond guiding me through this !!!

xylophone

Did you check out first thread in my post above?

As far as I can see, the poster did as you suggest.

slacko2

Yes I did was just checking I had it straight in my head.

xylophone

You could consider making the first contribution in this tax year, the second after 6 April and then waiting until both tax reclaims were done by HL.

https://www.hl.co.uk/help/sipp,-drawdown-and-annuity/sipp/tax-relief/how-is-tax-relief-reclaimed-on-my-sipp-contributions

You could then take the 25% and set up monthly drawdown?