Crystallised / Non Crystallised help

Mr_Benn

Hi all. Im taking out an Annuity, using some of the funds from my SIIP with Interactive Investor. 

I cant get my head round how Interactive work out what is my crystall/ non-crystall pots in my SIIP. With Hargreaves you see online the exact split of value and what funds are in the 2 pots. My plan is to use everything in my Crystallised pot , plus some of the money from my non-crystalissed pot. But I cant work out when I sell any Funds which pot it goes into etc.  I did call Interactive yesterday , but I couldnt understand it.  Just wonder if anybody else has used them and could help me get my head round it ?   Thanks. 

LHW99

II works out a percentage for crystallised / uncrystallised.

So eg if your original pot is £200k, at the beginning it is 100% uncrystallised, with potentially 25% (£50k) tax free.

Let's say you took half of the potential tax-free amount (25k). That means you have £75k crystallised and £100k uncrystallised. II doesn't separate the two parts, but says you now have (100*£75k/£175k = 42.86% ) crystallised and (100*£100k/£175k = 57.14%) uncrystallised.

Unlike HL, with II you cannot decide to have one set of investments for the crystallised pot and another for the uncrystallised.

They should be able to tell you in £ amount how much of each you have. The TFLS left will be 25% of the uncrystallised £.

Storcko14

To add to what LHW99 says ii has a section where it shows the exact split (Pensions > Benefits > Your SIPP Pots).  It is a virtual split but you can see exactly how much ££ value you have crystallised and uncrystallised. 

Mr_Benn

Thank you for the quick replies both. Yes, I can see the page where it shows me the split in values. Im just struggling to understand how Interactive can work in a different way to say Hargreaves , as I wouldve thought there was one legal way, mainly because you can only take 25% of the uncrystallised pot once. 

So using your example LHW99 ,  I now have a total of £175,000 left (42% uncrystallised).  I then buy a Fund for £10,000. Which pot does that money come out of, and what happens to any profit/ loss I make on the Fund. Or  is that still just worked out pro-rata between crystal/un-crystal ? 

af1963

When you sell (or buy) funds, it doesn't go into a separate 'crystallised' or 'uncrystallised' pot.  It's still just cash within your overall SIPP.

But at the point where you choose to take anything out, you can specify whether to take the cash from the uncrystallised portion ( e.g. as tax free cash or as a UFPLS payment including a tax free 25% or for a TFC/annuity combination),  or from the crystallised portion (where no further TFC is available).  Depending on what you choose, the remaining percentages crystallised/uncrystalised will be recalculated afterwards.

e.g. following on from LHW99s example: 

After taking your first TFC you have £175k , of which 43% is crystallised ( £75k)

Investment growth takes this to £190k.  The crystallised % doesn't change. You now have about £82k crystallised and £108k uncrystallised.

You sell some investments to raise cash for a withdrawal. The value of your SIPP, and the % crystallised, doesn't change ( except for small dealing costs)

You choose to take out £20k from the crystallised portion.  This leaves £62k crystallised from a total of £170k, so your new crystallised percentage is about 36%.  The £20k is taxable.

OR If you had chosen to take the £20k from the uncrystallised portion as a UFPLS ( 5k tax free and 15k taxable), this would leave the £82k crystallised amount unchanged, so your crystallised percent would now be 82/170 which is  about 48%.

OR If you had taken the 20k as TFC from the uncrystallised funds, this would move an extra 60k into the crystallised portion, so you would have 142/170 crystallised, about 84%.

After any subsequent investment growth, you would use these new percentages to work out the C/U split for any future withdrawals.


For the annuity purchase, I suspect it might be simplest to work out how much you will need to use from the uncrystallised funds. Then take out the corresponding amount of tax free cash, which will convert the required amount to "crystallised".  And then buy the annuity using the crystallised funds.   Simpler to understand than trying to buy the annuity with a mix of C and U funds.

Mr_Benn

Thank you so much AF, and others for explaining that so well.  Ive certainly learned more about how UFPLS as well !

My SIIP is invested, mostly in one global fund. My pot is roughly 55% uncrystallised. I need about 77% of my SIIP for the Annuity.  

So I use the whole of my crystallised pot, and for the remaining balance I need for the Annuity I use from my uncrystallised pot (working out that amount, after taking 25% as a UFPLS).

If correct, I guess I just tell Interactive the values or percentages I need, from which pot, and they sell the required number of my Global Funds ?

 

NoMore

Notional split - ii

^ explanation from II.

You have to ensure cash is available before any withdrawal, they don't sell for you. 

Mr_Benn

Im still struggling a bit to get my head round the best way to do this as I have cash and Funds currently in my SIIP. Im just trying to not lose out on some of my tax free sum somehow.

I want to use £65,000 towards my Annuity.

So, for example, say I hold cash of £65,000 , and also Funds totalling £25,000.

Interactive show that I have 54% uncrystalised, and 46% crystallised.

I dont need the tax free cash right now. I plan to still hold my some Funds afterwards, so I believe I want to have as big a % uncrystalised , so that any growth has more of a tax-free element.

How do I get to pay the £65,000 , but keeping as much of the remainder as Uncrystalised ? Is it easier to sell all my Funds temporarily?

Thanks in advance.

Kryten_the_Titan

In your example, cash of £65,000 and funds of £25,000 = £90,000 in total.

46% of those funds have been crystallised = £41,400.
54% of those funds have not been crystallised = £48,600.

Only a crystallised part of a pension can go to an annuity (i.e. after the tax free portion has been taken).

£65,000 - £41,400 leaves you £23,600 short of the annuity target value.

To add an additional £23,600 crystallised portion you would need to crystallise £31,466.67 of the remaining £48,600. This will give you the required £23,600 and a tax free lump sum of £7,866.67.

Kryten_the_Titan

Additional: in the above example, there is no avoiding the tax free lump sum.

Mr_Benn

Thank you Kryten.

Im getting there !

Back to my example. To start I have cash of £65,000 and £25,000 total of shares, made up of 2x Global Funds £20,000 and £3,500 and 1x Stock £1,500.

"To add an additional £23,600 crystallised portion you would need to crystallise £31,466.67 of the remaining £48,600. This will give you the required £23,600 and a tax free lump sum of £7,866.67."

So having done that, I then have £17,100 left for example in my SIIP. But how does that affect the Funds/Stocks that I currently hold though as I currently have £25,000. I get that cash can be simply worked out crystall/uncrystall, but if I actually hold shares, do some of them have to be sold before I can withdraw enough money ? Or I do need to stop thinking about actual holding in shares and its all about percentages.

Im really grateful for the help on here, and I hope it may help others who will ask the same questions.

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