Should I start to empty my SIPP

hoofy

I have just over 500k in my sipp.

I'm 63 next April.

No debts, kids, mortgage, don't go on holidays and don't really spend on anything apart from household bills.No plans for spending in the future.

I have a ltd company with no other directors or employees. I stopped taking a wage last year. I already have 35 yrs NI contributions. I have no other income but I did take a 10k dividend this year to make the most of my 12k tax allowance. I also have other bits and bobs to get it up a few grand.

I only started my sipp during covid as my business went through the roof (timber decking and garden timber) and needed to find a way to avoid paying large amount of tax. It has taken me till this year to empty out my ltd co bank account into my sipp with maximum amounts of employer pension contributions. My business is now very quiet as everyone already did their garden jobs in covid and it's all still there and not likely to need replacing for many years, so I think my sipp has served its purpose.

I always put 20k in my stocks and shares isa every year.

I'm thinking I need to get my income up to 50k each year so I only pay low rate tax and I probably would be better off doing it now before I get my state pension in just over 4 years time? So taking from my sipp seems like a sensible option to me? I would put the money in my stocks and shares GIA.

Am I thinking along the right lines? Or have I over-looked something?

Isthisforreal99

Have you checked your state pension forecast? The 35 years NI conntributions may or may not get you a full state pension.

hoofy

Yes, I have checked and I will get a full pension.

marlot

Yes, I would pull down from the SIPP. But I'd wait until after the budget - you need to think about capital gains in your general investment account. Perhaps look at short dated gilts.

hoofy

https://forums.moneysavingexpert.com/discussion/comment/82101518#Comment_82101518

Once I take from sipp my attention would then be focused on CGT etc that haven't been much of an issue up to now. I have cashed in shares each year to benefit from my 3k allowance.

EDIT. I'm assuming wait till after the budget is to see what's happening with CGT? If not, then what would I be watching for?

Grumpy_chap

I have just over 500k in my sipp.

I'm 63 next April.

I need to get my income up to 50k each year so I only pay low rate tax and I probably would be better off doing it now before I get my state pension in just over 4 years time? So taking from my sipp seems like a sensible option to me?

Based on your age, drawing £50k from a £500 SIPP won't see you through your reasonable life expectancy.

michaels

It is not clear what income you are living off or using to feed your ISA.

As we stand currently moving 500k out of a sipp over the next 20+ years dies not sound like the higher rate threshold will be a problem if your only other income is state pension.

hoofy

I have another £350k in S&S isa plus £250k in general S&S account plus £70k in bank account.

Vitor

For sure use genuinely unused tax-free bands, continue filling the ISA, but do not withdraw up to £50,000 merely because that band exists. First model expected spending, company distributions, SIPP growth, future withdrawals, tax residence and estate beneficiaries. Without that information, “emptying” the SIPP looks more like unnecessary tax acceleration than clear tax planning.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82101558#Comment_82101558

Based on your age, drawing £50k from a £500 SIPP won't see you through your reasonable life expectancy.

However that is based on the assumption the OP will be spending the £50K, which seems unlikely as they said;

No debts, kids, mortgage, don't go on holidays and don't really spend on anything apart from household bills.No plans for spending in the future.

Then if you add in -

I have another £350k in S&S isa plus £250k in general S&S account plus £70k in bank account. Plus a state pension

I suspect any savings on HRT, will be dwarfed by the eventual IHT bill, especially if there is some decent investment growth over the next decades.

hoofy

Not bothered about IHT, let whoever cops for it worry about it.

I doubt anyone is expecting anything because my wealth isn't obvious, so it will be a bonus for them.