Paying £2880 into pension when retired

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  • missile
    missile Posts: 11,689 Forumite
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    In practice it makes little difference, you can easily open another SIPP with one phone call.
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  • ukdw
    ukdw Posts: 281 Forumite
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    missile wrote: »
    In practice it makes little difference, you can easily open another SIPP with one phone call.

    Won't you eventually be liable for an extra closure fee of either £25+VAT or £295+VAT for each additional SIPP you open with HL?
    http://www.hl.co.uk/pensions/sipp/charges-and-interest-rates
  • peteduk
    peteduk Posts: 110 Forumite
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    Hello,
    I thought I understood when questions I asked earlier in this thread were kindly answered. Now some of the later posts show that I didn't understand. Therefore apologies and please bear with me.

    Current status:
    SIPP opened in my wife's name. £2880 deposited, £720 added by taxman for FY17
    Next steps proposed with questions:
    1). Call HL and ask to withdraw £900 = 25% tax free.
    Q. Can this be done online so I can do it on my wife's behalf?

    2). Call HL and ask to withdraw £10 so HL get tax code for my wife
    Q. Can this be done online so I can do it on my wife's behalf?
    Q. How will I know when HL have received the tax code?

    3). I was going to withdraw the balance less £1,000 and then top up with a further £2,880 for FY18.
    Q. But if the account has gone into drawdown my new understanding is that it might as well be closed and the total balance taken because my wife is a non tax payer. Is this right?
    Q. Can this be done online so I can do it on my wife's behalf?

    4). Q. If I am correct in step 3 can my wife open a new SIPP for FY18 with a new deposit of £2,880 with HL?
    Q. Can it be done in parallel with the above steps?

    5). Q. If step 4 and above is ok, is there a downside to this? e.g. are HL / the taxman happy for this to happen?

    Thank you for your support and I apologise for the length of my post, and especially if you feel I should have grasped it by now.

    Pete
  • Audaxer
    Audaxer Posts: 3,508 Forumite
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    peteduk wrote: »
    Hello,
    I thought I understood when questions I asked earlier in this thread were kindly answered. Now some of the later posts show that I didn't understand. Therefore apologies and please bear with me.

    Current status:
    SIPP opened in my wife's name. £2880 deposited, £720 added by taxman for FY17
    Next steps proposed with questions:
    1). Call HL and ask to withdraw £900 = 25% tax free.
    Q. Can this be done online so I can do it on my wife's behalf?

    2). Call HL and ask to withdraw £10 so HL get tax code for my wife
    Q. Can this be done online so I can do it on my wife's behalf?
    Q. How will I know when HL have received the tax code?

    3). I was going to withdraw the balance less £1,000 and then top up with a further £2,880 for FY18.
    Q. But if the account has gone into drawdown my new understanding is that it might as well be closed and the total balance taken because my wife is a non tax payer. Is this right?
    Q. Can this be done online so I can do it on my wife's behalf?

    4). Q. If I am correct in step 3 can my wife open a new SIPP for FY18 with a new deposit of £2,880 with HL?
    Q. Can it be done in parallel with the above steps?

    5). Q. If step 4 and above is ok, is there a downside to this? e.g. are HL / the taxman happy for this to happen?

    Thank you for your support and I apologise for the length of my post, and especially if you feel I should have grasped it by now.

    Pete
    As you wife is a non-tax payer and just wants the benefit of the tax relief each year, the best method in my view would be to draw out £2,600 by a lump sum (UFPLS rather than drawdown), and leave £1,000 in to keep account open. £650 (25%) of the £2,600 will be tax free and she will be taxed on the rest, but will be able to claim it back from HMRC in due course.

    In 2018/19 she can pay in £2880 and once the tax relief is added she can withdraw by UFPLS the £3,600, leaving in the original £1,000 as cash. So in 2018/19, and subsequent years if she follows the same process, she will be able to profit from the full £720 tax relief once claimed back from HMRC. That is how I understand it.

    Oh, and certainly for the first UFPLS withdrawal at least, you wife needs to phone up and get a form to complete and sign, before it's processed.
  • peteduk
    peteduk Posts: 110 Forumite
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    Hello Audaxer,
    Thank you for your reply.
    Unfortunately my wife hates computers and talking to anyone about money so even getting this far is difficult for her. When I first read it I thought it was more complicated than my proposal but if the claim from the taxman is simple maybe not.

    Thinking on:
    I could ask HL to send the form for her to complete to withdraw the £2,600

    Q. Then is it simply the case of getting another form from HMRC and filling it in to reclaim the tax paid?
    If so, again I could do that for her to complete.

    Q. Am I correct in thinking she'd only have to declare her other income (state pension) to the taxman so it would be straightforward?

    Thank you again for your help
    Pete
  • Audaxer
    Audaxer Posts: 3,508 Forumite
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    peteduk wrote: »
    Q. Then is it simply the case of getting another form from HMRC and filling it in to reclaim the tax paid?
    If so, again I could do that for her to complete.

    Q. Am I correct in thinking she'd only have to declare her other income (state pension) to the taxman so it would be straightforward?
    I'm not sure how you claim it back from HMRC. You can check online but you may need to phone them. If you/she registers online they will have details of all her income, which in this case will only be the State Pension, so I think it should be fairly straightforward.
  • TBC15
    TBC15 Posts: 1,452 Forumite
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    Deneb wrote: »
    I took a slightly different approach. I crystallised all but £1K of my SIPP, taking the 25% PCLS. The remaining 75% was moved to a SIPP Income Drawdown account, leaving the original SIPP open with the uncrystallised £1K still in it, to which I have continued to add further contributions.

    You could keep repeating this. As long as you leave at least £1K uncrystallised each time, the original SIPP will remain open.

    I'm sure its all one SIPP, part of which is in drawdown.
    Could be wrong but I'm sure we put all of my wife's SIPP into drawdown recently and our monthly contributions now go into the part of the SIPP that isn't in drawdown.
  • Deneb
    Deneb Posts: 420 Forumite
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    TBC15 wrote: »
    I'm sure its all one SIPP, part of which is in drawdown.
    Could be wrong but I'm sure we put all of my wife's SIPP into drawdown recently and our monthly contributions now go into the part of the SIPP that isn't in drawdown.


    It is, but if you're with HL, log in and you will see it is now split into drawdown and non-drawdown accounts for management purposes. It makes it easier to tell how much has been crystallised and how much hasn't. Any new contributions will go into the non-drawdown account to separate them from the crystallised funds.
  • Rob749
    Rob749 Posts: 76 Forumite
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    Hi everyone,
    My wife did UFPLS last tax year for the first time, and then reclaimed the tax back as she was taxed on emergency code. She has now got a tax code of 223N. HMRC have reduced her tax free allowance by the amount she withdrew from her pension provider (HL) plus her state pension and the married allowance, which I have claimed. Thats how that code was calculated.

    She only has a small income of £3816 from her State Pension, which was based on my NI contributions when I reached 65. She is a non tax payer and she has now received a letter from HMRC asking her to fill in a Self Assessment tax return for 2017/18. Will she have to do this next year if she puts another £2880 in her SIPP this year, and then draws the £3600, or will that be it now, once they see that she is not going to get any more income than that.

    Also in the letter HMRC have sent, they said she could do the return on line, she is already registered with Gov Gateway, but nowhere in her personal account is there any access to online forms. I eventually found a link to register for self assessment, but all that has done is created another Gateway account for her, which is exactly the same as the original one. Getting really frustrated now ! Please somebody help me ! Thank you.
  • jamesd
    jamesd Posts: 26,103 Forumite
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    edited 27 May 2018 at 12:56AM
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    Check the letter for a Unique Taxpayer Reference (UTR) number. Then try visiting https://online.hmrc.gov.uk/ to see whether she can log in there with her gateway account. A UTR is issued to everyone in self-assessment. Online self-assessment is pretty easy once you get used to it.
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