SIPP tax free cash. Any problems here?

kemsing

I have a SIPP and plan to retire this December when I will put it into drawdown. Would the revenue have a problem with the following strategy:
Make a substantial cash injection into the sipp in the second half of this year and receive the 20% tax relief within the sipp. A few months later (Dec) put the plan into drawdown and take the cash input plus tax relief as the 25% lump sum tax free cash.
Note1. I have made similar payments in the past two tax years so this is not a one off. Note2. There is no element of recycling tax free money here, the initial input comes from savings.
It seems to me this is a once in a life time opportunity at retirement. You can assume I pay enough income tax to cover the rebate.
Any comments would be very welcome.
Kemsing.

purch

Sounds like a brilliant idea to me :T

dunstonh

There is no problem paying as much as you like (within limits) before you crystallise the benefits. The HMRC only get fussy when you recycle after you crystallise the benefits.

There is actually a rule specific to final year of employment that allows greater contributions into the pension that year so it will not be an unusual or unexpected transaction for them.

kemsing

Thanks for your reply!! Very reassuring!

Just_landed

Hi all do not want to hijack this thread but it is to do with the subject.
Question for Dunstonh really does this also apply in the last year to people who do not work in other words put more than £3600.00 in the pot ?
PS took your advice the other month with thanks.

dunstonh

For those that do not work, they are stuck with the annual £3600 limit. That £3600 doesnt require any justification for where it comes from (excluding money laundering and fraud of course )

Just_landed

Thanks dunstonh.