Starting drawdown and contributing in same year

pterri

So, I’ve pushed the button and had retired. I’m still being paid up the the 27th may. I’ll be starting drawdown this tax year so does that trigger the contribution limit? I’ll be adding to my SIPP prior to starting drawdown but it’s in the same tax year. Also, presumably I’ll get some income tax back as I’ll be below the 40% limit but I guess that will sort itself out automatically without a prompt to HMRC. 

dunstonh

 I’ll be starting drawdown this tax year so does that trigger the contribution limit?

That will depend on what drawdown method you are using.   If you draw against the 75% element of the pot, then that is the day it starts.

Marcon

pterri said:

So, I’ve pushed the button and had retired. I’m still being paid up the the 27th may. I’ll be starting drawdown this tax year so does that trigger the contribution limit? I’ll be adding to my SIPP prior to starting drawdown but it’s in the same tax year. Also, presumably I’ll get some income tax back as I’ll be below the 40% limit but I guess that will sort itself out automatically without a prompt to HMRC. 

You trigger the MPAA on the day you 'flexibly access' your SIPP and take any taxable cash (however little). It isn't 'retrospective' within the tax year, so if you are going to contribute to your SIPP in the current tax year, and have the necessary earned income in this tax year to pay in more than £10K (including basic rate relief which will be added by the SIPP provider), and/or add employer contributions before you retire, you need to do so before triggering the MPAA.

af1963

Marcon said:

pterri said:

So, I’ve pushed the button and had retired. I’m still being paid up the the 27th may. I’ll be starting drawdown this tax year so does that trigger the contribution limit? I’ll be adding to my SIPP prior to starting drawdown but it’s in the same tax year. Also, presumably I’ll get some income tax back as I’ll be below the 40% limit but I guess that will sort itself out automatically without a prompt to HMRC. 

You trigger the MPAA on the day you 'flexibly access' your SIPP and take any taxable cash (however little). It isn't 'retrospective' within the tax year, so if you are going to contribute to your SIPP in the current tax year, and have the necessary earned income in this tax year to pay in more than £10K (including basic rate relief which will be added by the SIPP provider), and/or add employer contributions before you retire, you need to do so before triggering the MPAA.

Exception being if you can take a "small pots" withdrawal of up to £10k.  Some providers ( including H-L ) allow you to split your pot into separate "arrangements", up to three of which which can be taken in this way, without triggering MPAA.  

pterri

Marcon said:

pterri said:

So, I’ve pushed the button and had retired. I’m still being paid up the the 27th may. I’ll be starting drawdown this tax year so does that trigger the contribution limit? I’ll be adding to my SIPP prior to starting drawdown but it’s in the same tax year. Also, presumably I’ll get some income tax back as I’ll be below the 40% limit but I guess that will sort itself out automatically without a prompt to HMRC. 

You trigger the MPAA on the day you 'flexibly access' your SIPP and take any taxable cash (however little). It isn't 'retrospective' within the tax year, so if you are going to contribute to your SIPP in the current tax year, and have the necessary earned income in this tax year to pay in more than £10K (including basic rate relief which will be added by the SIPP provider), and/or add employer contributions before you retire, you need to do so before triggering the MPAA.

Thanks, that’s what I thought. May as well dump some in the SIPP and get the tax relief rather than an ISA. 

pterri

pterri said:

Marcon said:

pterri said:

So, I’ve pushed the button and had retired. I’m still being paid up the the 27th may. I’ll be starting drawdown this tax year so does that trigger the contribution limit? I’ll be adding to my SIPP prior to starting drawdown but it’s in the same tax year. Also, presumably I’ll get some income tax back as I’ll be below the 40% limit but I guess that will sort itself out automatically without a prompt to HMRC. 

You trigger the MPAA on the day you 'flexibly access' your SIPP and take any taxable cash (however little). It isn't 'retrospective' within the tax year, so if you are going to contribute to your SIPP in the current tax year, and have the necessary earned income in this tax year to pay in more than £10K (including basic rate relief which will be added by the SIPP provider), and/or add employer contributions before you retire, you need to do so before triggering the MPAA.

Thanks, that’s what I thought. May as well dump some in the SIPP and get the tax relief rather than an ISA. 

Mind you, I don’t think it will be as much as £10k so may be a moot point. 

MetaPhysical

...so just to be clear then, even if you were able to contribute £60k in the same tax year as triggering MPAA, as long as these contributions were made /before/ you pulled the trigger and withdrew some of the 75% then that would be fine?