small pot query - SIPP now uncrystallised if small pot taken

Random47

Hi, I am doing a small pot of £10K this year (and plan on one next tax year and final 3rd one the year after that). I transferred from Vanguard to HL in October last year in planning for this. My SIPP with HL is essentially static in that I no longer do monthly payments in (focus on employer DB AVC). Current value fairly small at circa £55K with it spread across 3 funds with £20K now in cash to cover this years and next years small pot (liquidated one of the funds this week). I will aim to leave rest in funds until 2027-8 then sell enough for final £10K small pot.
My question is on the application form from HL they state that:

You understand that if as a result of the small pot lump sum payment this will leave no further uncrystallised funds in my SIPP.... 

What are they meaning by this?

Marcon

Random47 said:

Hi, I am doing a small pot of £10K this year (and plan on one next tax year and final 3rd one the year after that). I transferred from Vanguard to HL in October last year in planning for this. My SIPP with HL is essentially static in that I no longer do monthly payments in (focus on employer DB AVC). Current value fairly small at circa £55K with it spread across 3 funds with £20K now in cash to cover this years and next years small pot (liquidated one of the funds this week). I will aim to leave rest in funds until 2027-8 then sell enough for final £10K small pot.
My question is on the application form from HL they state that:

You understand that if as a result of the small pot lump sum payment this will leave no further uncrystallised funds in my SIPP.... 

What are they meaning by this?

You have to take the whole lot in one go if you are taking it under the small pots regime.

FIREDreamer

Marcon said:

Random47 said:

Hi, I am doing a small pot of £10K this year (and plan on one next tax year and final 3rd one the year after that). I transferred from Vanguard to HL in October last year in planning for this. My SIPP with HL is essentially static in that I no longer do monthly payments in (focus on employer DB AVC). Current value fairly small at circa £55K with it spread across 3 funds with £20K now in cash to cover this years and next years small pot (liquidated one of the funds this week). I will aim to leave rest in funds until 2027-8 then sell enough for final £10K small pot.
My question is on the application form from HL they state that:

You understand that if as a result of the small pot lump sum payment this will leave no further uncrystallised funds in my SIPP.... 

What are they meaning by this?

You have to take the whole lot in one go if you are taking it under the small pots regime.

Hargreaves will create a notional £10k pot and take it out of your main pot directly.

£2,500 tax free
£7.500 less basic tax of £1,500 leaves £6,000
So they pay you £8,500 and HMRC £1,500
A small pot is taxed at BR regardless of your tax position - if this is wrong HMRC will calculate the correct tax due or refundable.

Done it myself twice, one more bite at the cherry is available.

Random47

OK  thanks. If I understand this part correctly HL are essentially creating the £10K separate pot, and after pay out no part of it remains uncrystallised - So if person only took 8K of the 10K separated small pot the remaining £2K would be crystallised.
Clarification I am seeking is that in my case the remaining SIPP (£35K fund, £10K cash) still all remain uncrystallised.

Dazed_and_C0nfused

Random47 said:

OK  thanks. If I understand this part correctly HL are essentially creating the £10K separate pot, and after pay out no part of it remains uncrystallised - So if person only took 8K of the 10K separated small pot the remaining £2K would be crystallised.
Clarification I am seeking is that in my case the remaining SIPP (£35K fund, £10K cash) still all remain uncrystallised.

That would mean it wasn't a "small pot".

Notepad_Phil

Random47 said:

OK  thanks. If I understand this part correctly HL are essentially creating the £10K separate pot, and after pay out no part of it remains uncrystallised - So if person only took 8K of the 10K separated small pot the remaining £2K would be crystallised.
Clarification I am seeking is that in my case the remaining SIPP (£35K fund, £10K cash) still all remain uncrystallised.

Unless HL have changed everything in the last couple of years since we went through 3 x small pot withdrawals, then yes, the 35K fund and £10L cash all remain uncrystallised.

Edited to add: Only £8K would go into the separated small pot if you wanted to withdraw £8K via the small pots route, in that case of a £8K small pot withdrawal your uncrystallised remaining pot would have £35K fund and £12K cash.

Random47

Notepad_Phil said:

...

Unless HL have changed everything in the last couple of years since we went through 3 x small pot withdrawals, then yes, the 35K fund and £10L cash all remain uncrystallised.

...

Cheers good to confirm that the rest of my SIPP is uncrystallised so when I take second and third small pot it still qualifies for 25% tax free element, etc.