Small Pot from Drawdown account...?

Ciprico

If one crystalised their entire SIPP, taking the max TFLS of £268,275...

Can they then take a 10k "Small pot" from the residual drawdown fully taxable account...?

Assuming not...

Could they open a new SIPP, paying £2880 for three years, then cash it in under the "Small Pot Rule", benefitting from tax relief and 25% TFLS....?

Albermarle

On the first point I would assume not as well.

However For the second suggestion I think you should be OK.
As long as you use a provider that offers the facility to make a Small Pot withdrawal. 

kempiejon

I have only heard rumours that some providers will split a bigger pot into £10k pots to facilitate the small pots drawdown without triggering MPAA. Don;t need to research at the mo.
I am intending to build a couple of £2880s to a bigger small pot.

MallyGirl

For the 1st point I think you would need to do the small pot(s) first

I believe HL will do the 3 x £10k small pot split off. 

squirrelpie

Ciprico said:

Could they open a new SIPP, paying £2880 for three years, then cash it in under the "Small Pot Rule", benefitting from tax relief and 25% TFLS....?

3 x £3600 (gross) = £10800 so it's above the small pots limit. You'd need to subscribe less if it was possible at all.

kempiejon

squirrelpie said:

Ciprico said:

Could they open a new SIPP, paying £2880 for three years, then cash it in under the "Small Pot Rule", benefitting from tax relief and 25% TFLS....?

3 x £3600 (gross) = £10800 so it's above the small pots limit. You'd need to subscribe less if it was possible at all.

Or invest into volatility of the markets. I've proved investments can turn £10k into much less in just a few weeks many times.

Albermarle

kempiejon said:

I have only heard rumours that some providers will split a bigger pot into £10k pots to facilitate the small pots drawdown without triggering MPAA. Don;t need to research at the mo.
I am intending to build a couple of £2880s to a bigger small pot.

As said HL will split off three small pots from a big one. 
On the other side Vanguard do not offer the facility to take even one small pot ( an not the only ones)
I know for sure that apart from HL, Fidelity and A J Bell offer the small pot withdrawal, but will not split pots like HL.

I only refer to retail providers, I believe some IFA platforms will also do it.

Qyburn

Does the fact that he's already taken max tax free matter, I mean will he still get a tax free element from the new "small pot" created from the £2880/3600?

FIREDreamer

Qyburn said:

Does the fact that he's already taken max tax free matter, I mean will he still get a tax free element from the new "small pot" created from the £2880/3600?

Yes, but best to build up to £10,000 three times (over nine years) to maximise tax free cash of £7,500 (three lots of £2,500) - note that whilst it is tax free, it isn’t called PCLS.

Albermarle

FIREDreamer said:

Qyburn said:

Does the fact that he's already taken max tax free matter, I mean will he still get a tax free element from the new "small pot" created from the £2880/3600?

Yes, but best to build up to £10,000 three times (over nine years) to maximise tax free cash of £7,500 (three lots of £2,500) - note that whilst it is tax free, it isn’t called PCLS.

To be on the safe side best to aim just under £10K . If there was investment growth and/or interest on cash and it took you to £10,001, then the plan is foiled.

FIREDreamer

Albermarle said:

FIREDreamer said:

Qyburn said:

Does the fact that he's already taken max tax free matter, I mean will he still get a tax free element from the new "small pot" created from the £2880/3600?

Yes, but best to build up to £10,000 three times (over nine years) to maximise tax free cash of £7,500 (three lots of £2,500) - note that whilst it is tax free, it isn’t called PCLS.

To be on the safe side best to aim just under £10K . If there was investment growth and/or interest on cash and it took you to £10,001, then the plan is foiled.

Not at Hargreaves Lansdown it isn’t. 😉😉😉