Advice on SIPP needed

paulb22

I have no taxable income for 2024-5 and expect the same for 2025/6, I'm currently living comfortably on savings and expect to be doing so until my state pension begins in May of 2026.

I intend to open a SIPP and pay in £2880 for 2024/5 and the same amount for 2025/6 in order to get the £1440 in tax relief. (£770x2)

As this would be a very short term investment (maximum 15 months) I require as low a risk as possible so I want to leave the funds uninvested.

I'd also like to minimise fees, if I were to purchase a SIPP in March of this tax year and pay in £2880 and pay in the second £2880 in April of the next would that qualify me for the full £1440 and would I then be able to withdraw the full amount of £7200 having only paid two or three months fees?

Any recommendations for providers would also be appreciated.

El_Torro

Your idea sounds sensible enough, assuming you don't already have a pension. 

I'm not aware of any SIPPs which charge for money that is sitting in cash, so I don't think it matters too much which SIPP provider you go with. I use both Hargreaves Lansdown and AJ Bell, neither of them charge for uninvested funds. They both pay interest on cash too, though if you're only going to have the money there for a few months it doesn't matter too much what the interest rate is. 

LHW99

I think at one time HL used to require £1000 left in for a year, for some reason. Otherwise it seems to be one suggested here for that purpose.

Roger175

We do this for my wife and as of the next tax year, I will be a non-taxpayer also, so will start doing it.

We always pay the money into her SIPP (with A J Bell) and immediately put it into a Short Term Money Market fund, along with the tax relief which typically arrives 6 weeks or so later. The transaction fees for this are just £1.50 each way (in and out), so with these funds currently paying nigh on 5%, it soon starts earning a small return. 

We tend to make the payment into her SIPP at the start of the tax year and then draw it out near the end of the tax year. By doing this we are usually up by at least £100 in addition to the 'free' £720.

ali_bear

Seems strange that you are not drawing income from one or more pensions? You are missing out on the tax free allowance. Taking that income later will cost 20% (or possibly 40%!) of £12570.