Paying £2880 into pension when retired

Dazed_and_confused wrote: »

Can't follow your figures.

I though the £3,750 was all taxable (added to £8,750 = £12,500) but should be within Personal Allowance.


19/20 Tax Year. Tax code will be 1250. She will only withdraw from SIPP a figure that keeps her under that figure


But then when you get to £4,650 £900 is suddenly tax free.


With the additional £3,600 including PIRAS paid into SIPP. She can withdraw an additional £900 tax free, totalling £4,650

What type of withdrawal is she making in each situation?


From year 2, she will make £900 tax free withdrawal and £10 in month 1 and 340 per month for months 2-12 and hope HMRC inform SIPP provider of her tax code.

It also sounds like she has significant savings. Is this in an ISA or will she be able to get better rates on taxable accounts coupled with use of the savings starter rate of tax where up to £5,000 of taxable interest is taxed at 0%?

She can juggle her savings to suit that fact. As you say there are many savings rates better than ISA's.


Assuming my figures are correct, that is how she will proceed. The dilemma is whether the 2880/3600 plan will be worth it based on my figures and her SIPP not reducing enough.

Help please lol

https://www.hl.co.uk/retirement/drawdown/faqs

She needs to request the illustration and then fill in the forms to commence drawdown.

She will then be able to take the PCLS and whatever of the balance is required - it will be taxed and she will need to apply to HMRC for a refund.

She will have to ask HL to "reopen" the SIPP for the next dollop and can proceed similarly.

Remember the tax relief is only available up to age 75.

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100

swindiff wrote: »

Thanks for that. Will she need to ask to reopen the sipp if she leaves 1000 in there. She has only asked for 2600 to be moved into drawdown.

No because it wont be closed.

Once the SIPP has been crystallised, you need to contact HL before paying in your next £2880.

I only became aware of this opportunity this time last year at whick time I was 1 full tax year away from drawing my company pension which would make me a tax payer again. Because of my tardiness in setting up me SIPP (with HL) and moving it to drawdown my account wont have been open for a full year until 6/4/19 (rather bad timing on my part!).

So here is my query if anyone can put me straight.
I currently have £1000 in my drawdown account and have got my SIPP reopened (currently with £0) ready to put £2880 into in the next week or so. Can I therefore (when the tax relief is added) move £3600 into the drawdown account and withdraw £3600 without the tax free 25% lump sum this financial year and then next financial year (i.e. after my account has been open greater than 1 year) opt to take the £900 Tax free lump sum from this year hence only getting taxed on £100 rather than £1000 as I'll be a basic rate tax payer next year?

Yours very confused!

Sky.