Pension access, self managed? Short to medium view..

Linton

stevechoo said:

Once again, thanks to everyone for the wonderful feedback I've received to this so far, it's greatly appreciated...

Some thing has literally just come to mind... I'm unable to get any amount of secured loan due to my current low contracted hours...

I'm currently 15k short my settlement figure... Drawing off the taxable element of my pension is an option.. draw 20k, pay 4k tax was my thinking which didnt appeal to me initially...

But I assume if I draw 15k taxable additional along with the tax free element of the pension, then I declare this in my self assessment due by January 2026? And this is paid through my new tax code issued by HMRC accordingly? 

Is this correct?...

Taxable pension drawdowns are taxed by the SIPP provider through PAYE just as if you were employed by them (without NI) using a tax code provided by HMRC.

However for the first ever taxable payment HMRC dont know you exist as an "remployee" and so will not have issued a tax code.  The provider therefore has to use an emergency code which may well mean that the tax deducted is wrong.  It will be corrected in subsequent taxable drawdowns that tax year, or if none after the end of the tax year.

You can also request an earlier repayment using form P53.

LHW99

Don't forget that if you take even £1 taxable money you will be restricted to the £10,000 AA for future contributions.

stevechoo

Thanks again everyone..

Can u try and explain to me what will happen in terms of pay etc as a result of doin the following:-

Drawing down 15k taxable income from my pension in the next month or 2... This will be my first and only withdrawal in taxable terms for the foreseeable future...

My tax code is currently 1045L, my contracted hours equate to just over 6k a year.  In the next few weeks I will start working overtime (but not currently able to increase contracted) taking my wages back upto 12 to 18k a year fairly quickly...

How will this affect my pay / how do I pay the tax? I can sort of work out possibly how but I'd appreciate if someone could maybe break it down for me please...

stevechoo

Hi everyone, my situation has moved on a little now and I have a better understanding of the matters discussed so far, thanks again to everyone thats contributed...

My plan was to take a partial transfer from my current active workplace pension and put it into my old inactive one from a previous employer... Then I would crystalize and drawdown from there, leaving my current one open to carry on receiving pension payments through paye...

However, the provider of my inactive pension has informed me they do not accept partial transfers only complete transfers where the other pension is closed...

I am awaiting an answer from my current provider on how to proceed, I have asked them can I open and start a new workplace pension on closure of the existing one..

I suppose I could do it the other way round? Old into new and crystallize drawdown from my current one... I suppose one question I have in relation to that is what happens to the future incoming payments in terms of the 25% tax free allowance... My pension payments through paye are around £2.7k per year, I plan on staying in my job for maybe another 3 years, that 8k (2k tax free allowance)...

I'll have a better idea when I receive a reply from my current provider but does anyone have any thoughts on the best way this can proceed for me from this point...

Nb... I need to access as much tax free allowance as possible and do a taxable drawdown to help me reach my settlement figure for my impending divorce...

Thanks

Albermarle

stevechoo said:

Hi everyone, my situation has moved on a little now and I have a better understanding of the matters discussed so far, thanks again to everyone thats contributed...

My plan was to take a partial transfer from my current active workplace pension and put it into my old inactive one from a previous employer... Then I would crystalize and drawdown from there, leaving my current one open to carry on receiving pension payments through paye...

However, the provider of my inactive pension has informed me they do not accept partial transfers only complete transfers where the other pension is closed...

I am awaiting an answer from my current provider on how to proceed, I have asked them can I open and start a new workplace pension on closure of the existing one..

I suppose I could do it the other way round? Old into new and crystallize drawdown from my current one... I suppose one question I have in relation to that is what happens to the future incoming payments in terms of the 25% tax free allowance... My pension payments through paye are around £2.7k per year, I plan on staying in my job for maybe another 3 years, that 8k (2k tax free allowance)...

I'll have a better idea when I receive a reply from my current provider but does anyone have any thoughts on the best way this can proceed for me from this point...

Nb... I need to access as much tax free allowance as possible and do a taxable drawdown to help me reach my settlement figure for my impending divorce...

Thanks

The alternative is just to open a new modern pension, and transfer the inactive one into that.
It is not complicated to do, and all on line. Normally there are no charges .
Plenty of threads on the forum about doing just that.

stevechoo

Thanks, my provider has just replied.. they say I have to stop being an active member of my current works pension so that the full transfer can be made, then once that is complete I can reactivate my current works pension again...

I need the tax free allowance from both funds.. 

I assume the answer I've received from my provider satisfies my requirements?..

stevechoo

Albermarle said:

The alternative is just to open a new modern pension, and transfer the inactive one into that.
It is not complicated to do, and all on line. Normally there are no charges .
Plenty of threads on the forum about doing just that.

So a new fund where I transfer the inactive fund into and do the partial transfer from my current one and do the drawdown from the new fund??

In light of the answer I received (in the above post) from my currently pension provider, what are the possible pros and cons of each alternative?..

Thanks again

stevechoo

Hi everyone, just an update on my current situation.. I have opened a new SIPP pension and arranged for 2 pension trfs to be made into it (1 complete 1 partial), I thank one of the above posters who suggested this, as this has turned out to be the easiest option..

The trfs are in process, when complete I will do a drawdown in order to meet my divorce settlement..

The option I've chosen regards investment of funds is the 'cash, to be changed at a later date' type option... There's are 4 options there (1 of which is the cash).. the one option is universal lifestyle... One of my existing pensions has been invested in this type of fund...

After this drawdown is done I do not intend to drawdown further for at least 5 years, probably longer... Would the universal lifestyle option be a suitable investment for me going forward to achieve an expectation of reasonable returns in the long term?

Thanks, any feedback will be greatly appreciated..