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Are gains in a drawdown fund liable to CGT?
Apodemus
Posts: 3,410 Forumite
This should be a very easy question to answer, but searches show no definitive answers.
I have a SIPP which remains invested but have moved part of this into Drawdown. I'm taking a monthly income from the Drawdown but also have some of it invested within the drawdown fund. I am presuming that any income or capital gains within the fund remain treated as they were within the SIPP and that my tax liability only arises when I cash these investments in and remove the cash from the Drawdown Fund? In other words, income tax on withdrawals from the Fund but no income tax or CGT within the fund itself.
I'd be grateful if someone could confirm that I have got this right!
I have a SIPP which remains invested but have moved part of this into Drawdown. I'm taking a monthly income from the Drawdown but also have some of it invested within the drawdown fund. I am presuming that any income or capital gains within the fund remain treated as they were within the SIPP and that my tax liability only arises when I cash these investments in and remove the cash from the Drawdown Fund? In other words, income tax on withdrawals from the Fund but no income tax or CGT within the fund itself.
I'd be grateful if someone could confirm that I have got this right!
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Comments
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A drawdown fund is still a tax-favoured pension fund, so the treatment is the same as when held within your SIPP. As you say, any (income) tax liability arises when you withdraw funds.Apodemus said:This should be a very easy question to answer, but searches show no definitive answers.
I have a SIPP which remains invested but have moved part of this into Drawdown. I'm taking a monthly income from the Drawdown but also have some of it invested within the drawdown fund. I am presuming that any income or capital gains within the fund remain treated as they were within the SIPP and that my tax liability only arises when I cash these investments in and remove the cash from the Drawdown Fund? In other words, income tax on withdrawals from the Fund but no income tax or CGT within the fund itself.
I'd be grateful if someone could confirm that I have got this right!Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!1 -
Wonderful, thanks!0
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I am presuming that any income or capital gains within the fund remain treated as they were within the SIPP and that my tax liability only arises when I cash these investments in and remove the cash from the Drawdown Fund?If you were in an SIPP before crystallisation, you are still in one after crystallisation. Drawdown is the name for the transaction. Drawdown is not a type of pension. However, some providers will have marketing names for their products and may refer to their crystallised fund and the uncrystallised fund using more marketable names.In other words, income tax on withdrawals from the Fund but no income tax or CGT within the fund itself.Its still a pension. Nothing has changed.
I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.1 -
Dunston, thanks. That's what I thought but I couldn't find anything that actually said that!
It's with HL, where the terms they use are "SIPP" and "SIPP Income drawdown" for the two accounts.0
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