Withdrawal from SIPP or ISA?

Smudgeismydog

junebaby said:

I took a lump sum so I think only part of it was tax free.   That was a couple of years ago. 

Sorry to be vague but I’m not really sure which is one of the reasons I am thinking of cashing it in. 

Should I speak to HL to clarify this?

Yes, I think it would be worth clarifying this point with HL, as it sounds like some of the remaining £18,000, might be tax free.

My instinct, would be for you to access the SIPP now for the planned costs, and keep the Cash ISA as a pot for potential future withdrawals.

This would also simplify your arrangements, which might be helpful for you.

FIREDreamer

junebaby said:

I took a lump sum so I think only part of it was tax free.   That was a couple of years ago. 

Sorry to be vague but I’m not really sure which is one of the reasons I am thinking of cashing it in. 

Should I speak to HL to clarify this?

With Hargreaves Lansdown it’s easy.

(1) Uncrystallised funds are kept in a “SIPP” and 25% can be taken tax free. This is pension that has not been touched.

(2) Crystallised funds are kept in a ”SIPP Income Drawdown” and all withdrawals are taxable. The tax free cash has already been taken from these funds.

Smudgeismydog

IvanOpinion said:

Definitely check with HL to see if you have any tax free money available and use that first.
I would probably suggest taking rest of the money from your cash ISA rather than the SIPP. My only reason for this is that in another few years we might see the personal allowance rates starting to creep up again which might reduce the amount of tax paid from the SIPP (pure speculation).

I also thought about retaining the SIPP to potentially access some of it tax-free at a later date within a higher personal allowance, but discounted as the OP already has just shy of £16,000 annual income. Both the state pension and occupational pension will have some inflationary increases, so we would need a fairly big jump in personal allowance to make this feasible.

The OP (and please correct me if I’ve got this wrong), would appear a cautious investor with limited knowledge of the workings of pensions, and so I felt, on balance, a simpler approach, would be retain the cash ISA wrapper as they seemed more comfortable with this, than extracting monies (across tax years) out of the SIPP.

Smudgeismydog

FIREDreamer said:

junebaby said:

I took a lump sum so I think only part of it was tax free.   That was a couple of years ago. 

Sorry to be vague but I’m not really sure which is one of the reasons I am thinking of cashing it in. 

Should I speak to HL to clarify this?

With Hargreaves Lansdown it’s easy.

(1) Uncrystallised funds are kept in a “SIPP” and 25% can be taken tax free. This is pension that has not been touched.

(2) Crystallised funds are kept in a ”SIPP Income Drawdown” and all withdrawals are taxable. The tax free cash has already been taken from these funds.

Top tip @FIREDreamer 👍

junebaby

I spoke to the HL pension desk this morning who confirmed I can take 25% tax free. The rest will be taxed at 20%. 

I had to go through a long list of questions and they are sending out forms in the post for me to sign. 

Thank you for all your comments. 

FIREDreamer

junebaby said:

I spoke to the HL pension desk this morning who confirmed I can take 25% tax free. The rest will be taxed at 20%. 

I had to go through a long list of questions and they are sending out forms in the post for me to sign. 

Thank you for all your comments. 

Can you not see what you have online like in my picture above?

junebaby

No I logged in and couldn’t find anything. 

After phone call yesterday form arrived today!!  All completed and back in the post. Should all be completed within 15 days. 

squirrelpie

junebaby said:

No I logged in and couldn’t find anything.

When you finish logging in it is shown on the screen right in front of you. There's a list of accounts and the relevant balances.

Smudgeismydog

Excellent, I’m really pleased for you