Reaching Tax Free Lump Sum Limit in SIPP - Worth taking this part now?

Albermarle

Ciprico said:

I did as you suggest. Depending on your age, and planned retirement age, you may struggle to get all the money out of the sipp at lower tax rate, so all future growth could well be taxed at 40% or more.

Having 25% of this future growth outside the sipp provides options...

Also, if you expire after 2027, any untaken tax free pension becomes taxed pension regarding your estate, so use it or lose it. (I think this is under review, hopefully someone will clarify)

After 2027, any untaken tax free pension will be counted as part of the IHT calculation. However if you have taken it all out and put it somewhere else, it will be also included in the IHT calculation. So would make no difference in that respect.

It would make a difference to your pension beneficiary if you died after age 75, as they would pay tax on all withdrawals whether you had taken all the tax free cash, or not. If you died before age 75, they could withdraw it all tax free.
This rule is in place now and is unconnected to the IHT changes due in 2027.

The proposed IHT changes and the above rule seem to be commonly mixed up, although they are separate issues.

Juno_Moneta

 

100% I will be taking the full £268k on my 57th birthday. Fair to say that this is one area where I don't need any formal advice to tell me the blinkin' obvious. 

Me too - assuming the Gov haven’t messed around with this option by then… 

ali_bear

That's a lot of money to be holding, where to invest it? Or do you have a large purchase in mind? 

Markets could go down. The TFC limit could be increased, eventually..