Paying in £2880 into SIPP question

alffeh33

Hi,

My wife and me are considering paying in £2880 into her SIPP so to boost it up to £3600 after 20% tax added. She or myself doesn't have the cash, but I have the option of 0% credit card advance with 3.5% handling fee for 15 months. Can somebody clarify whether this would be against any HMRC rules, or is this a none starter, ie me paying in money into her account and transferring that to her SIPP.

We are both above 55 and on Universal Credit. My plan is to pay off the credit card before end of 0% expiry is to take out tax free lump sum from my pension.

TIA

QrizB

3.5% of £2880 is £100.80, which is less than the £720 you stand to gain.

What effect will taking a £3600 pension lump sum have on your UC claim? You might want to ask on the Benefits board?

https://forums.moneysavingexpert.com/categories/benefits-tax-credits

kempiejon

A third party can give money to another, they can add it to their SIPP, I can't see how it's specifically against any rules.

Check the maths but it seems plausible. If you can get the credit card money to the SIPP a 3.5% handling fee to improve cash flow costs £100 on £2880. The tax rebate is £720, the tax free bit of that is £180. Then there's income tax on withdrawal to factor on the rest and Money Purchase Annual Allowance rules. Check universal credit impact.

alffeh33

kempiejon said:

The tax rebate is £720, the tax free bit of that is £180. Then there's income tax on withdrawal to factor on the rest and Money Purchase Annual Allowance rules. Check universal credit impact.

Yes the tax addition is £720, but if she just took 25% TFLS that would be £900, leaving £2700 in the SIPP. The remaining shortfall on the credit card I will draw from my pension TFLS. This way we have not taken any income from pensions so I would think that UC is not affected.

kempiejon

alffeh33 said:
Yes the tax addition is £720, but if she just took 25% TFLS that would be £900, leaving £2700 in the SIPP. The remaining shortfall on the credit card I will draw from my pension TFLS. This way we have not taken any income from pensions so I would think that UC is not affected.

Hmm, OK I guess if that makes it work for your cash flow. If you don't have £2880 to add to the wife's pensions today use the CC and paid a £100 bill to do it before settling the bill with money from your pension some year/months later. 

squirrelpie

alffeh33 said:

Yes the tax addition is £720, but if she just took 25% TFLS that would be £900, leaving £2700 in the SIPP. The remaining shortfall on the credit card I will draw from my pension TFLS. This way we have not taken any income from pensions so I would think that UC is not affected.

Well you will have taken income from pensions, but only tax-free income. You should check whether that affects UC, perhaps on the benefits board.

alffeh33

Thanks for all the replys.

I don't know how to do this. Can someone please help in moving this to Benefits section.

A question for benefits/UC. Does taking pension tax free lump sum count as income or capital, even if you take repeated small amounts over say a year, and you use the amount taken out to pay off debt immediately.

ali_bear

You could start another thread there, and link to this one like this https://forums.moneysavingexpert.com/discussion/6595113/paying-in-2880-into-sipp-question#latest