Closing down my pension

PaulInLa

Hi Guys

I've contacted Charles Stanley, waiting to see what they have to say.

I guess I should take out enough to get to the £40k limit this year, assuming there is tax to pay, and the rest next year when I'm unlikely to reach £40K. The kids will have to pay tax when they get it but that's unavoidable I think.

Paul

Marcon

PaulInLa said:

Hi Guys

I've contacted Charles Stanley, waiting to see what they have to say.

I guess I should take out enough to get to the £40k limit this year, assuming there is tax to pay, and the rest next year when I'm unlikely to reach £40K. The kids will have to pay tax when they get it but that's unavoidable I think.

Paul

If it's classed as serious ill health commutation, with the requisite supporting medical evidence about life expectancy, there's no tax to pay if you take the whole SIPP.

DRS1

What is the £40K limit?

PaulInLa

Hi

I thought £40k was the point where you pay the higher rate tax but I think it's actually £50.

Paul

Marcon

PaulInLa said:

Hi

I thought £40k was the point where you pay the higher rate tax but I think it's actually £50.

Paul

See https://www.gov.uk/income-tax-rates

PaulInLa

Thinking  out loud for a minute - if any of my my kids pay tax on the money and then pay it into a SIPP they'll get the tax back won't they? Presumably it will be locked in there for the foreseeable future, but several of them are 50ish. 

Paul

Aretnap

PaulInLa said:

Thinking  out loud for a minute - if any of my my kids pay tax on the money and then pay it into a SIPP they'll get the tax back won't they? Presumably it will be locked in there for the foreseeable future, but several of them are 50ish. 

Paul

They could do that, assuming they have "relevant income" (ie they're working and being paid a salary) and have enough left over in annual allowances (ie they're not paying very large amounts into pensions already).

Or they could just not withdraw it immediately, but wait until they stop working, when they'll be able to pay a lower tax rate, or no tax, on withdrawals. Essentially treat it like their own pension.

PaulInLa

Aretnap

I see what you mean - I guess it depends on their specific circumstances.

Paul