HL Sipp - Taking tax free lump sum.

Goldiegirl

My husband has a Hargreaves Lansdown SIPP. He's 75 this year, and now wants to take his 25% tax free lump sum.

We understand from the information on the website that all the funds in the Sipp will be moved to the 'Drawdown Account' within the SIPP.

I've been told that, before we put in our drawdown application, we'll need to sell investments held in the SIPP to the value of the tax free lump sum, so that the cash will be available for when the drawdown application is processed.

Please could someone who knows about these things confirm that my understanding is correct - I don't want to make any mistakes.

Thank you

Time2Go_25

Everything is here: https://www.hl.co.uk/retirement/drawdown/apply-for-drawdown-online

The part of interest says:

• Tax-free cash - we can only make a payment to you if you have enough uninvested cash in your SIPP to cover the tax-free cash amount. You should make sure this is available before you apply, to avoid delaying your application.

Goldiegirl

thank you so much - that answers my question perfectly

Veloflyer

I have further questions as I too am with HL. All my pot is currently uncrystallised in various funds/ETFs

After applying for drawdown, should I want (say) 25K tax free allowance, then I sell 100K of funds? Am I correct in thinking I would then receive the 25K into my current account - the one I have already set up with them for investing?

I have more than 100K in funds/ETFs with them. I assume I do not have to sell all my funds/ETFs in one go to gain the tax free allowance, and that I can receive the tax free allowance as per above as many times as I like until the uncrystallized finds run out?

Assuming I have 400K total with them, this would mean eventually 300K is crystallized. I assume I can invest this money as per uncrystallized, and set up some sort of regular payment from this sum to my current account.

Apologies perhaps, but I have read the above link, and it does not make these things entirely clear - to me anyways.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81881811#Comment_81881811

You only need to sell enough funds to have enough cash available to pay the £25K tax free cash to you.

You will be given some alternatives I think about how you want the £75K to be transferred to the drawdown account. Normally they are transferred as the same funds you are invested in the SIPP, so you end up with the same portfolio in the SIPP and the drawdown account, but with different values. Although I think you will be offered an alternative such as just transferring selected funds, or even as cash ( in which case you would have to cash in £100K of investments in the SIPP)

Assuming I have 400K total with them, this would mean eventually 300K is crystallized. I assume I can invest this money as per uncrystallized, and set up some sort of regular payment from this sum to my current account.

Once the drawdown account us setup by HL and investments are transferred, you can have the same investments as in the SIPP, or different ones, it is up to you.. Yes you can then ask for regular income payments from the drawdown account. I am not sure with HL whether you need to always be sure to have enough cash in the drawdown account for the income payments. Some providers will sell investments for you, but not sure about HL.

Veloflyer

You only need to sell enough funds to have enough cash available to pay the £25K tax free cash to you.

You will be given some alternatives I think about how you want the £75K to be transferred to the drawdown account. Normally they are transferred as the same funds you are invested in the SIPP, so you end up with the same portfolio in the SIPP and the drawdown account, but with different values. Although I think you will be offered an alternative such as just transferring selected funds, or even as cash ( in which case you would have to cash in £100K of investments in the SIPP)

Thanks for the reply - To be clear, if wanted 25K tax free, I could ask for 100K to be transferred into drawdown, only sell 25K of funds, and ask for the 75K to be transferred over as the same funds?

Understood about having cash for regular income payments from the crystallised. That would seem to make sense.

squirrelpie

And don't forget that with HL, the SIPP account and the SIPP Drawdown account are charged separately, each with a £200 charge limit for stocks and shares.

FIREDreamer

https://forums.moneysavingexpert.com/discussion/comment/81881917#Comment_81881917

Reducing to £150 from March assuming not using OEICS.

squirrelpie

Reducing to £150 from March assuming not using OEICS.

True, won't affect me since I'm leaving as a result of the increase in charges. 😁

senor_naranja

The Process via HL is pretty self explanatory - there is lots to read after you hit the "Apply for Drawdown" button and lots of checkboxes to answer each and every time you apply for Drawdown from your SIPP.

As mentioned above you do need to have enough "cash" and that does mean selling your Investments BUT I am not sure whether you'll have to sell the entire 100% as the funds are moved to a separate drawdown account once the process is complete and you get to choose what funds you want to invest in at the point of the drawdown request. The 25% is paid to you via Bank Transfer so you will have to make sure you have that set-up in HL too , From memory I am pretty sure that is a pre-req that it tells you about but its been a while since I did a "test" couple of K just to make sure I knew the process and was aware of roughly how long it took.
J

thingswerentthisbadinmyday

https://forums.moneysavingexpert.com/discussion/comment/81881897#Comment_81881897

Just asking if you’re now clear about the procedure?

Not for the first time, I gave instructions yesterday for a small TFLS from my SIPP (with 75%of the total transferred to drawdown).

I’ve been told today that the process could take up to 15 days to complete.