Flexi Drawdown v UFPLS

bjorn_toby_wilde

https://forums.moneysavingexpert.com/discussion/comment/82053029#Comment_82053029

My first took about 20 minutes as I had to track down the figures for what percentage of the lump sum allowance I had taken from my first DB pension. Subsequent ones have taken 5-10 minutes. That’s with AJ Bell.

Mick70

I think if we go down the UFPLS route then it would be an annual withdrawl, rather than monthly, due to admin involved

we would likely just put the annual amount in an easy access bank account (get about 4.5% currently) and take it from there for the year. At least you have certainty then for that year income. I am just unsure if it makes any difference as to what month of the year you take that annual UFPLS amount re: tax, our original thoughts had been to do it 1st April every year - but say if did first one on 010428- does that mean it impacts your self assessment for 27/28 rather than 2829 ? in which case may wait until mid april.

For time being just using cash savings for wife but will need to decide soon on when to start accessing the sipp (leaving s+s isa for when state pension kicks in, otherwise would lose out tax wise)

LHW99

Everyone in finance seems to get busy around the beginning of April. I would personally either try mid-March for one tax year, or mid-April if you want it counted for the next

dunstonh

our original thoughts had been to do it 1st April every year 

Things to be aware of are that not all providers have a daily payroll.

Leaving it to the last minute during the busiest period of the year is a risk that won't happen in time. Indeed, the cut-off for the tax year for many providers is sometime in March.

During exceedingly busy periods, some providers have struggled and had a very early cut-off.

As long as you do the payment after the 6th of March, you're in the final payroll month. So use the 6th of March as your target date to initiate the drawdown. Or if you were the decent provider, they will let you select the date. So you could have it already in place well before that.

molerat

If there is not a tax code already set against the pension then start early in the year with a <£1396 UFPLS so no tax is deducted and a code is set up this gives you time to ensure the correct code is allocated and get the correct estimated income set in your tax account. Then take the remainder of the total £16760 for the year UFPLS after 6 March again with no tax deducted. Next year take the whole lot in March with no tax deducted. A wee bit of extra faff in the first year, with HL for instance you need to set up receiving bank account with proof, proof of ID etc so getting the ball rolling early prevents that from being a delay in March which could trip you into the next tax year.

Mick70

thanks for replies - needless to say I meant 010427, not 010428…sausage fingers 😀

Dekkoblue

I had a thread about this recently, and my plan is to do what Molerat above has suggested. Take the UFPLS £16760 after the 6th of March each year.

I'm still waiting for my Tax reclaim P50 after nearly 9 weeks, so i wont make the mistake again of taking a UFPLS in April.

TheComputerGuru

https://forums.moneysavingexpert.com/discussion/comment/82054329#Comment_82054329

Where does the magic amount "£1396" come from?

NoMore

https://forums.moneysavingexpert.com/discussion/comment/82072706#Comment_82072706

1/12 of 12570 is 1047, this is the amount you can withdraw tax free in April with a 1257L code. Add the 25% tax free and you come to £1396 available tax free with no problem without having to claim from the tax man. Essentially its 1/12 of the £16760 you can get tax free via UFPLS.

mrklaw

sounds like you’re doing a year in arrears so you’d have the first year in cash? and then draw in March sucking up your accumulated tax availaiblity at the end of the tax year, then starting in April you do nothing (live off the March withdrawal until March the next year)?

if so, why do you still need to do the ‘small withdrawal’ thing? isnt’ that mainly an April thing so you get the correcct code and they don’t think you’re going to have an income of £160k a year? if you take £16760 in March in one lump then nothing in April shouldn’t that just work without faffing?