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Confused about inheriting SIPP tax allowances

justme111
Posts: 3,531 Forumite


Hello, I have inherited a SIPP and I am really confused on the tax rules, I am at my wits' end.
I have been getting conflicting information - some sources write that if the SIPP owner died before 75, you can leave the funds in the pension pot and withdraw anytime tax-free, even in, say, 50 years.
Others say that anything taken after only 2 years have passed is subject to tax.
This is taken directly from HMRC Gov website:
"You may also have to pay tax if the pension pot’s owner was under 75 when they died and any of the following apply:
Even the IFA who I had an initial consultation with wasn't certain.
Could someone who is knowledgeable in this field clarify once and for all please?
Or if not, suggest who would be able to help?
I have been getting conflicting information - some sources write that if the SIPP owner died before 75, you can leave the funds in the pension pot and withdraw anytime tax-free, even in, say, 50 years.
Others say that anything taken after only 2 years have passed is subject to tax.
This is taken directly from HMRC Gov website:
"You may also have to pay tax if the pension pot’s owner was under 75 when they died and any of the following apply:
- you’re paid the lump sum more than 2 years after the pension provider is told of the death .."
Even the IFA who I had an initial consultation with wasn't certain.
Could someone who is knowledgeable in this field clarify once and for all please?
Or if not, suggest who would be able to help?
The word "dilemma" comes from Greek where "di" means two and "lemma" means premise. Refers usually to difficult choice between two undesirable options.
Often people seem to use this word mistakenly where "quandary" would fit better.
Often people seem to use this word mistakenly where "quandary" would fit better.
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Comments
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If you have inherited a pension from someone that died before the age of 75 then you can draw on it tax free whenever you want to. That could be immediately, in 2 years or in 50 years.
If the pension has not been passed to you within 2 years of death then there are penalties to be paid by the pension provider - they will be very keen to ensure this does not happen. I have never known such a delay.I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.2 -
HappyHarry said:If you have inherited a pension from someone that died before the age of 75 then you can draw on it tax free whenever you want to. That could be immediately, in 2 years or in 50 years.
If the pension has not been passed to you within 2 years of death then there are penalties to be paid by the pension provider - they will be very keen to ensure this does not happen. I have never known such a delay.The word "dilemma" comes from Greek where "di" means two and "lemma" means premise. Refers usually to difficult choice between two undesirable options.
Often people seem to use this word mistakenly where "quandary" would fit better.0 -
There used to be a thing with occupational pension schemes where you had to pay death benefits within 2 years of death for ?IHT? reasons. Maybe this is that sort of thing?1
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justme111 said:HappyHarry said:If you have inherited a pension from someone that died before the age of 75 then you can draw on it tax free whenever you want to. That could be immediately, in 2 years or in 50 years.
If the pension has not been passed to you within 2 years of death then there are penalties to be paid by the pension provider - they will be very keen to ensure this does not happen. I have never known such a delay.I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.1 -
I suspect when the Revenue say lump sum they mean lump sum.0
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HappyHarry said:justme111 said:HappyHarry said:If you have inherited a pension from someone that died before the age of 75 then you can draw on it tax free whenever you want to. That could be immediately, in 2 years or in 50 years.
If the pension has not been passed to you within 2 years of death then there are penalties to be paid by the pension provider - they will be very keen to ensure this does not happen. I have never known such a delay.The word "dilemma" comes from Greek where "di" means two and "lemma" means premise. Refers usually to difficult choice between two undesirable options.
Often people seem to use this word mistakenly where "quandary" would fit better.0 -
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justme111 said:HappyHarry said:justme111 said:HappyHarry said:If you have inherited a pension from someone that died before the age of 75 then you can draw on it tax free whenever you want to. That could be immediately, in 2 years or in 50 years.
If the pension has not been passed to you within 2 years of death then there are penalties to be paid by the pension provider - they will be very keen to ensure this does not happen. I have never known such a delay.
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.I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.0 -
DRS1 said:
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