SIPP and LISA fees

Nuggy96

Hi,

I currently have a SIPP with Fidelity, in ETFs, so I pay £7.50 a month in fees. My question is, does it make sense for the £7.50 to come out of my SIPP or a CMA.

From my understanding if I pay it out of my SIPP, I put £6 in, get the 25% (£1.50) uplift to make £7.50 and pay it with that. However, if I pay out of my CMA, I pay £7.50, and no boost. To clarify I'd be adding the money into my SIPP to pay it, I wouldn't be selling investments or using existing money in my SIPP. So surely paying out of my SIPP is better?

Can someone explain if I'm missing something?

In contrast with my LISA because the limit is £4k and I put the limit in each year, it's better to pay £4k into LISA and then have fees out of a CMA so I don't lose compounding growth on my investment. However, in the SIPP scenario, I'd be paying the £7.50 fee anyway it's just a matter of whether I put the £6 into my SIPP or £7.50 in my CMA account.

Just want people's thoughts, thanks in advance

masonic

I always try to pay SIPP fees from within and ISA fees from without. For my LISA I pay it from within but mainly because I've been too lazy to open another account with the provider.

Albermarle

Yes paying fees out of the SIPP makes sense, as effectively you are withdrawing from the SIPP without paying tax. However you can not do this yourself. You just have to make sure there is zero in the CMA, and then the platform will be forced to take the fees from the SIPP.

intalex

https://forums.moneysavingexpert.com/discussion/comment/81891467#Comment_81891467

I have a SIPP and LISA with AJ Bell both with identical investments (gilts) which pay the coupon into the respective cash portions, and from where the respective platform fees are collected monthly. I have zero in my GIA and ISA accounts - would having some cash in either lead to the SIPP and LISA platform fees to be collected from there?

Also, is it possible to pay monthly platform fees by direct debit or credit card?

Nuggy96

https://forums.moneysavingexpert.com/discussion/comment/81891496#Comment_81891496

Not sure about your second question, but in terms of paying fees for AJ Bell, I messaged them to pay out of my CMA account. I usually rack up around £50 of debt in there after a few months then just transfer money in from my account. See it as an interest free loan

dunstonh

Charges from the SIPP virtually every time is the most tax efficient.

Altior

Might be worth pointing out that Invest Engine has no fees for DIY SIPP. Definitely tax efficient ;) If your ETFs are available on their platform, seems like a decent alternative.

Nuggy96

https://forums.moneysavingexpert.com/discussion/comment/81892533#Comment_81892533

You're not comparing like for like, in option 1 I use £7.50 outside money, no money used inside LISA (£7.50 in total).

In option 3,4,5 you're using £7.50 from LISA and £7.50 outside money in CMA, so £15 in total, of course that's better… I think you've just AI'd this because AI didn't understand my logic above.

masonic

https://forums.moneysavingexpert.com/discussion/comment/81893312#Comment_81893312

@TheTelltaleChart has defined those scenarios using the information you provided that you exhaust your LISA allowance each year. If you did not, then there would be a further scenario whereby you sell £7.50 invested inside the LISA to pay the fee, use the £7.50 in the CMA to subscribe back into the LISA. Under this assumption LISA could win out, but it doesn't fit your stated circumstances.

Where (3) might fall down is if your pension provisions were so light that you'd be able to withdraw the full contents of your SIPP tax free in the years leading up to SPA, but under that scenario SIPP would still be as good as LISA.

The other scenario that hasn't been considered is spend the money in the CMA and increase workplace pension salary sacrifice (if available).

fistfulofsteel

ii has just informed me that it is not permissible to have their £5.99 Core plan without paying the fees via direct debit, and have threatened to switch me to their £14.99 plan if I cancel the DD (I already cancelled it through my bank on the advice of the first ii customer service agent I spoke to, so I'm not sure what will happen now ☹️). I'm trying to cut my expenses as much as possible currently as I don't have much income and am trying to stretch out savings until I am old enough to draw my SIPP. Should I switch to another provider? My SIPP is around £40k, mostly invested in LS60.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81895036#Comment_81895036

You don't have to pay by DD as such but just can't pay directly from the investment account with Core:

Do I have to pay my monthly fee by Direct Debit?

You don’t have to pay your monthly fee by Direct Debit but you’ll have to be on our Plus or Premium plans to pay from an investment account instead.

https://media-prod.ii.co.uk/s3fs-public/pdfs/rates-and-charges.pdf