Should I start planning to move money from my SIPP to ISAs?

Triumph13

If you are in (or move to) a modern scheme that allows you to just put part of your overall fund into FAD, UFPLS is essentially just a special case of FAD.

UPFLS is simple because it's a one stage process: "Please crystalise X amount of my fund and pay me 25% tax free and all the rest as taxable income"

FAD is more complicated as it's a two stage process: 1) "Please crystalise X amount of my fund, pay me 25% tax free and put 75% in a drawdown fund"; followed by  2)"Please pay me Y amount of taxable income from my drawdown funds"

UFPLS is easier, but it only works well if you are happy that it gives you the correct amount of both tax free and taxable withdrawals.  If you want to get more tax free cash than 1/3rd of the taxable income you want to take, then UFPLS won't let you do that.  FAD will.

You could do it all via UFPLS in your case, it would just slow the rate of getting the money rehomed in an ISA.  No big deal, unless you are worried about the availability of ISA allowance in the future, or exceeding the overall limit for tax free cash if your funds grow / the limit is cut.

WitsEnd101

Thank you all and specifically Triumph for the clear and detailed guidance. 

I am going to crunch some numbers using both UFPLS and FAD to set up a withdrawl / transfer strategy. I will also come back in Feb with an update on whether I decided to fully retire and trigger MPAA or otherwise.

Albermarle

WitsEnd101 said:

Thank you all and specifically Triumph for the clear and detailed guidance. 

I am going to crunch some numbers using both UFPLS and FAD to set up a withdrawl / transfer strategy. I will also come back in Feb with an update on whether I decided to fully retire and trigger MPAA or otherwise.

In many circumstances there is little/nothing to choose between UFPLS and FAD. However if you want to set up regular monthly payments, this can be done via FAD more easily, just because many providers are not set up for regular UFPLS payments, they are seen more as a way of taking irregular lump sums.
Not sure if it has been mentioned, but with either case you might well find the pension provider takes more tax off than you expect. However you can claim it back, or it will resolve itself through the tax system eventually.

WitsEnd101

Thanks Albermarle. My SIPP and ISA provider is Interactive Investor who I hope have the flexibility for both UFPLS and FAD?

It does concern me the emergency tax situation and the time it takes for HMRC to pay back. I have literally just received the HR tax relief for 2024/25 this morning after many months of chasing.

Dazed_and_C0nfused

WitsEnd101 said:

Thanks Albermarle. My SIPP and ISA provider is Interactive Investor who I hope have the flexibility for both UFPLS and FAD?

It does concern me the emergency tax situation and the time it takes for HMRC to pay back. I have literally just received the HR tax relief for 2024/25 this morning after many months of chasing.

It is only 4 and a bit months after the end of the tax year, could be a lot worse to be honest!