Tax & pension contributions in retirement

dont_use_vistaprint

I retired at 52 living on savings but hitting 55 now have been able to access 2 pensions.

Total pension income looks like it will be £9190 per year with cpi increases each April. (This is not my SIPP which is still in accumulation mostly vls80 , invesco BIPS and money markets)

My tax code is 1257LX. Does this mean I can have another £8400 in interest from non-isa accounts tax free ? 

What is  the maximum amount I can
move from savings to SIPP each year.

if you were my age, single, no mortgage , good health, active / travel lifestyle, how many years cash would you hold outside of SIPP , S&S ISA / trading accounts etc.

I currently have about 7 years of cash and just within the amount of interest that's tax free but with pensions now paying that is maybe 10-12 years worth of cash so probably too high / missing opportunities for better long term growth 

Dazed_and_C0nfused

dont_use_vistaprint said:

I retired at 52 living on savings but hitting 55 now have been able to access 2 pensions.

Total pension income looks like it will be £9190 per year with cpi increases each April. (This is not my SIPP which is still in accumulation mostly vls80 , invesco BIPS and money markets)

My tax code is 1257LX. Does this mean I can have another £8400 in interest from non-isa accounts tax free ? 

What is  the maximum amount I can
move from savings to SIPP each year.

if you were my age, single, no mortgage , good health, active / travel lifestyle, how many years cash would you hold outside of SIPP , S&S ISA / trading accounts etc.

I currently have about 7 years of cash and just within the amount of interest that's tax free but with pensions now paying that is maybe 10-12 years worth of cash so probably too high / missing opportunities for better long term growth 

Your tax code is largely irrelevant, it's just a mechanism for trying (where necessary) to deduct tax during the tax year.

But assuming you have a Personal Allowance of £12,570 i.e. have not applied for Marriage Allowance, and your only non savings non dividend income is pension income of £9,190 then you can have £3,380 in interest which uses up the remainder of your Personal Allowance.

And then anything above that will be taxed, but the next £6,000 will be at 0%.

Not sure where you have got your £8,400 figure from.  And if you want "tax free" interest then it's ISA's you need.

With no earnings your maximum pension contribution would be £3,600 (£2,880 that you pay and £720 in basic rate relief the pension company adds).

dont_use_vistaprint

Dazed_and_C0nfused said:

dont_use_vistaprint said:

I retired at 52 living on savings but hitting 55 now have been able to access 2 pensions.

Total pension income looks like it will be £9190 per year with cpi increases each April. (This is not my SIPP which is still in accumulation mostly vls80 , invesco BIPS and money markets)

My tax code is 1257LX. Does this mean I can have another £8400 in interest from non-isa accounts tax free ? 

What is  the maximum amount I can
move from savings to SIPP each year.

if you were my age, single, no mortgage , good health, active / travel lifestyle, how many years cash would you hold outside of SIPP , S&S ISA / trading accounts etc.

I currently have about 7 years of cash and just within the amount of interest that's tax free but with pensions now paying that is maybe 10-12 years worth of cash so probably too high / missing opportunities for better long term growth 

Your tax code is largely irrelevant, it's just a mechanism for trying (where necessary) to deduct tax during the tax year.

But assuming you have a Personal Allowance of £12,570 i.e. have not applied for Marriage Allowance, and your only non savings non dividend income is pension income of £9,190 then you can have £3,380 in interest which uses up the remainder of your Personal Allowance.

And then anything above that will be taxed, but the next £6,000 will be at 0%.

Not sure where you have got your £8,400 figure from.  And if you want "tax free" interest then it's ISA's you need.

With no earnings your maximum pension contribution would be £3,600 (£2,880 that you pay and £720 in basic rate relief the pension company adds).

Thanks , yes I forgot to add the £1000 Personal Savings Allowance - and messed up the number somehow ! So in my situation it’s currently £9,380 tax free interest from non isa savings.

Re; your only non savings non dividend income is pension income of £9,190

I will be getting significant dividend income each 3 months from BIPS but as it’s within a cash account on a SIPP any for 25/26 won’t count for tax but it may for 26/27 ?

Dazed_and_C0nfused

dont_use_vistaprint said:

Dazed_and_C0nfused said:

dont_use_vistaprint said:

I retired at 52 living on savings but hitting 55 now have been able to access 2 pensions.

Total pension income looks like it will be £9190 per year with cpi increases each April. (This is not my SIPP which is still in accumulation mostly vls80 , invesco BIPS and money markets)

My tax code is 1257LX. Does this mean I can have another £8400 in interest from non-isa accounts tax free ? 

What is  the maximum amount I can
move from savings to SIPP each year.

if you were my age, single, no mortgage , good health, active / travel lifestyle, how many years cash would you hold outside of SIPP , S&S ISA / trading accounts etc.

I currently have about 7 years of cash and just within the amount of interest that's tax free but with pensions now paying that is maybe 10-12 years worth of cash so probably too high / missing opportunities for better long term growth 

Your tax code is largely irrelevant, it's just a mechanism for trying (where necessary) to deduct tax during the tax year.

But assuming you have a Personal Allowance of £12,570 i.e. have not applied for Marriage Allowance, and your only non savings non dividend income is pension income of £9,190 then you can have £3,380 in interest which uses up the remainder of your Personal Allowance.

And then anything above that will be taxed, but the next £6,000 will be at 0%.

Not sure where you have got your £8,400 figure from.  And if you want "tax free" interest then it's ISA's you need.

With no earnings your maximum pension contribution would be £3,600 (£2,880 that you pay and £720 in basic rate relief the pension company adds).

Thanks , yes I forgot to add the £1000 Personal Savings Allowance - and messed up the number somehow ! So I’m my situation it’s currently £9,380 tax free interest from non isa savings.

Re; your only non savings non dividend income is pension income of £9,190

I will be getting significant dividend income each 3 months from BIPS but as it’s within a cash account on a SIPP any for 25/26 won’t count for tax but it may for 26/27 ?

If it's a dividend paid within the SIPP why would it be taxable?

dont_use_vistaprint

Dazed_and_C0nfused said:

dont_use_vistaprint said:

Dazed_and_C0nfused said:

dont_use_vistaprint said:

I retired at 52 living on savings but hitting 55 now have been able to access 2 pensions.

Total pension income looks like it will be £9190 per year with cpi increases each April. (This is not my SIPP which is still in accumulation mostly vls80 , invesco BIPS and money markets)

My tax code is 1257LX. Does this mean I can have another £8400 in interest from non-isa accounts tax free ? 

What is  the maximum amount I can
move from savings to SIPP each year.

if you were my age, single, no mortgage , good health, active / travel lifestyle, how many years cash would you hold outside of SIPP , S&S ISA / trading accounts etc.

I currently have about 7 years of cash and just within the amount of interest that's tax free but with pensions now paying that is maybe 10-12 years worth of cash so probably too high / missing opportunities for better long term growth 

Your tax code is largely irrelevant, it's just a mechanism for trying (where necessary) to deduct tax during the tax year.

But assuming you have a Personal Allowance of £12,570 i.e. have not applied for Marriage Allowance, and your only non savings non dividend income is pension income of £9,190 then you can have £3,380 in interest which uses up the remainder of your Personal Allowance.

And then anything above that will be taxed, but the next £6,000 will be at 0%.

Not sure where you have got your £8,400 figure from.  And if you want "tax free" interest then it's ISA's you need.

With no earnings your maximum pension contribution would be £3,600 (£2,880 that you pay and £720 in basic rate relief the pension company adds).

Thanks , yes I forgot to add the £1000 Personal Savings Allowance - and messed up the number somehow ! So I’m my situation it’s currently £9,380 tax free interest from non isa savings.

Re; your only non savings non dividend income is pension income of £9,190

I will be getting significant dividend income each 3 months from BIPS but as it’s within a cash account on a SIPP any for 25/26 won’t count for tax but it may for 26/27 ?

If it's a dividend paid within the SIPP why would it be taxable?

Just thinking out loud! My understanding is cash accounts in sipp may be taxable for 26/27 but any for 25/26 doesn’t need declaring

Dazed_and_C0nfused

dont_use_vistaprint said:

Dazed_and_C0nfused said:

dont_use_vistaprint said:

Dazed_and_C0nfused said:

dont_use_vistaprint said:

I retired at 52 living on savings but hitting 55 now have been able to access 2 pensions.

Total pension income looks like it will be £9190 per year with cpi increases each April. (This is not my SIPP which is still in accumulation mostly vls80 , invesco BIPS and money markets)

My tax code is 1257LX. Does this mean I can have another £8400 in interest from non-isa accounts tax free ? 

What is  the maximum amount I can
move from savings to SIPP each year.

if you were my age, single, no mortgage , good health, active / travel lifestyle, how many years cash would you hold outside of SIPP , S&S ISA / trading accounts etc.

I currently have about 7 years of cash and just within the amount of interest that's tax free but with pensions now paying that is maybe 10-12 years worth of cash so probably too high / missing opportunities for better long term growth 

Your tax code is largely irrelevant, it's just a mechanism for trying (where necessary) to deduct tax during the tax year.

But assuming you have a Personal Allowance of £12,570 i.e. have not applied for Marriage Allowance, and your only non savings non dividend income is pension income of £9,190 then you can have £3,380 in interest which uses up the remainder of your Personal Allowance.

And then anything above that will be taxed, but the next £6,000 will be at 0%.

Not sure where you have got your £8,400 figure from.  And if you want "tax free" interest then it's ISA's you need.

With no earnings your maximum pension contribution would be £3,600 (£2,880 that you pay and £720 in basic rate relief the pension company adds).

Thanks , yes I forgot to add the £1000 Personal Savings Allowance - and messed up the number somehow ! So I’m my situation it’s currently £9,380 tax free interest from non isa savings.

Re; your only non savings non dividend income is pension income of £9,190

I will be getting significant dividend income each 3 months from BIPS but as it’s within a cash account on a SIPP any for 25/26 won’t count for tax but it may for 26/27 ?

If it's a dividend paid within the SIPP why would it be taxable?

Just thinking out loud! My understanding is cash accounts in sipp may be taxable for 26/27 but any for 25/26 doesn’t need declaring

Do you have a source for that 🤔

eskbanker

dont_use_vistaprint said:
My understanding is cash accounts in sipp may be taxable for 26/27 but any for 25/26 doesn’t need declaring

Where has that understanding come from?  It's possible (but unconfirmed) that (income from) cash within S&S ISAs may be taxed, but not aware of anything changing in SIPPs?

dont_use_vistaprint

eskbanker said:

dont_use_vistaprint said:
My understanding is cash accounts in sipp may be taxable for 26/27 but any for 25/26 doesn’t need declaring

Where has that understanding come from?  It's possible (but unconfirmed) that (income from) cash within S&S ISAs may be taxed, but not aware of anything changing in SIPPs?

Oh my missunderstanding I thought it was referring to cash accounts in any kind of non-taxable wrapper

molerat

One important point is around how you are accessing these pensions and having only one code allocated, 1257LX.  Or is that the emergency code that has been used on each pension for the first withdrawal ?