Alternative to UFPLS

SVaz

Instead of people doing one UFPLS a year and paying tax / claiming it back (as lots don’t allow it monthly) why don’t people seem to consider part drawdown? (at least I don’t see it mentioned on here).

Say you want £12000 in income,  you take £3k tfc then £950 a month drawdown and it’s not taxed at all.   It’s the same end result as UFPLS, isn’t it? 

Moonwolf

Some people do.  It depends on your other sources of income and so on.

I know people who are using ISAs and tax free income until their state pension kicks in.  This is particularly popular with people who were planning to leave the non cash free part of their pot to children, draw down all the cash free allowance over time and leave the rest.  Obviously this plan might be different with the inheritance tax changes.

It also depends on your long term plans. You might be better keeping tax free cash to avoid 40% tax when all your state pension kicks in.  If you have a good sized pot but are below the £268k tax free limit, the cash free part will continue to grow in your investment pot so overall you might get more.  

In my case, I have DBs to £10K by the end of this year so less room, more at 65 and I plan to spend all of my DC pot by the time I am 85-90.  Less tax now just means more tax later and while I should be well under the 40% limit, with the current frozen thresholds you never know, but with 25% of drawdown tax free available to the end I should be good.

dunstonh

Say you want £12000 in income,  you take £3k tfc then £950 a month drawdown and it’s not taxed at all.   It’s the same end result as UFPLS, isn’t it? 

Regular UFPLS is frequently mentioned but not all providers support it. Some people do 2xUFPLS a year, with the second in March.  The way you describe it is just a different way.

ali_bear

My current provider/scheme supports UFPLS but not flexi-access drawdown. That's why I will be transferring into their SIPP, or another providers SIPP, in due course. 

squirrelpie

SVaz said:

Instead of people doing one UFPLS a year and paying tax / claiming it back (as lots don’t allow it monthly) why don’t people seem to consider part drawdown? (at least I don’t see it mentioned on here).

Say you want £12000 in income,  you take £3k tfc then £950 a month drawdown and it’s not taxed at all.   It’s the same end result as UFPLS, isn’t it? 

I've mentioned part drawdown on here before now, specifically as an alternative to UFPLS. I don't understand the specific numbers you give as an example though. Could you explain how you calculate them?

SVaz

Crystalise £12000.
Take £3000 tax free cash.
Draw £750 x 12.   Not £950 🤗

Sam_666

SVaz said:

Crystalise £12000.
Take £3000 tax free cash.
Draw £750 x 12.   Not £950 🤗

Agree numbers were wrong indeed.
Even better, crystalize £16760, take £4190 tax free. Left with 12 x £1047.5 (£12570).
That is presuming no other taxable income in tax year.

squirrelpie

SVaz said:

Crystalise £12000.
Take £3000 tax free cash.
Draw £750 x 12.   Not £950 🤗

Ah OK. Why not crystallise £12000. Take £3000 tax free and save. Take £1000 per month for 9 months from the pension, then take £1000 per month from the saved cash. Sums get more complicated if tax is involved anywhere

SVaz

Trying to avoid any tax being taken/having to reclaim - just for simplicity really.

Can’t do the whole £16760,  my DB kicks in at the end of this year, (  it’s going straight into my other (untouched) Sipp ) until I retire.  

My Wife can do the £16760 thing once she stops working for me,  she’ll do it to get everything out of her Sipp and into ISAs before State pension kicks in.