Pensionwise advice re SIPP ?

Brynsam · 16 August 2019 at 2:16PM

Carolinemjs wrote: »

In a conversation this morning with a Pensionwise advisor I was told that I can't pay anymore into my SIPP which I've only had for about 3 years, as I've taken money from it. Is this correct?

Sounds as if a wire has crossed somewhere. It's very easy to ask a question in this complex area and it isn't quite what you thought it was! Ring them back and ask to clarify.

Albermarle · 16 August 2019 at 2:35PM

Does this mean in this situation we would need to open another SIPP into which to make the new ongoing contributions?

Normally not , you can have both crystallised and uncrystallised funds in the same SIPP and new contributions add to the uncrystallised part.
Some SIPPs have two discrete parts and you can have different funds in the crystallised part and the uncrystallised part ( if you want to) . Some just have one pot but have an indication what % is crystallised .

SonOf · 16 August 2019 at 3:11PM

We need clarification.

If you have only taken the 25% tax free lump sum then the reduction in the annual allowance does not occur.

If you have accessed the 75% taxable chunk, even if its only 1p, then your allowance reduces to £4000.

The 25% tax free lump sum is never taxed and you do not have to reclaim the tax. Only if you have accessed the 75% element are you taxed.

There is an exception if you have used the small pots rule (for funds under £10,000). On those you are taxed on the 75% but it does not trigger the annual allowance reduction. However, you must specifically use small pots rules and not UFPLS. There is a difference in the administration, even though the amount received would be the same.

Carolinemjs · 16 August 2019 at 9:41PM

Linton wrote: »

This is confusing since previously you said:
whhich would imply you have taken more than the TFLS. TFLS's are never taxed in the first place.

It would be helpful if you could clarify.

Crystalised means having drawn out the total TFLS. So you cant simply add to a crystallised SIPP since that would confuse things - the old money would be crystallised and the new money wouldnt. HL may be able to handle this by effectively having different pots within the one SIPP. Otherwise you may have to set up a new SIPP and then when you have withdrawn its TFLS transfer the new crystalised SIPP to the old one.

Apologies, I find the terminology confusing, use the wrong words and add to the problem:(

I've checked and can see that in 2017 and 2018 I withdrew the Tax Free Lump Sum and it was NOT taxed. The TFLS for 2019 was added to the SIPP, I mean it was invested and not put in the cash account.
Does any of your foregoing advice apply now to my circumstances?
Once again apologies, I really struggle with this.

Dazed_and_confused · 16 August 2019 at 9:52PM

That still doesn't explain this comment you made earlier.

I've taken it as a lump sum, HL pay it to me less tax and I then reclaim the tax.

I think you need to start again and explain exactly what has happened if anyone is going to be able to provide any meaningful response.

It would probably help if you referred to the tax year not calendar year. 2019 could be during the 2018:19 tax year or the 2019:20 tax year.

Carolinemjs · 17 August 2019 at 10:15AM

I've spoken with HL this morning and understand exactly where I am with this.
Thanks to all for replying.

billy2shots · 17 August 2019 at 10:23AM

I think the OP believes they can withdraw 25% free of tax every year rather than just as a one off.

xylophone · 17 August 2019 at 5:43PM

I think the OP believes they can withdraw 25% free of tax every year rather than just as a one off.

She can contribute the £2880 to the SIPP, wait for the tax relief, put the SIPP into drawdown. take the 25% tax free PCLS and the balance as she chooses.

In the next tax year she can contact HL, ask them to re open the SIPP, pay in her £2880, wait for the tax relief, take the 25% PCLS and the balance as she chooses.

In the next tax year she can do the same.

Carolinemjs · 17 August 2019 at 9:03PM

Yes this is what I've been doing but without being able to use the correct terms to describe it!
Thank you xylophone for your clarification which should also make it clear to others

jamesd · 17 August 2019 at 10:41PM

NedS wrote: »

In a few years (at 60) we will want to take the TFLS and drawdown £12.5K per year tax free (personal allowance) pension income to bridge the gap between 60 and SRA (67), whilst sill contributing £3600 gross each year. Does this mean in this situation we would need to open another SIPP into which to make the new ongoing contributions? How many SIPPs is an indivudual allowed to open (I assume then there is no limit)? If we didn't need the TFLS, would it be simpler to do uncrystallised drawdown where the first 25% of each withdraw is tax free?

There are two ways to handle accounts. One is to combine uncrystallised and crystallised into a single account and somehow track how much is uncrystallised. The other is to have one account for each type of money and this is the way HL does it.

You can have as many pensions as you like, both ones you're paying in to and those you're withdrawing from or doing nothing with.

HL have in their terms a statement that they can close a account with a balance below 1000 so you'd end up leaving that much in the account you're paying in to. Similarly they might close the account you're taking money from. For this reason it's likely with HL to be cleaner overall to have regular direct debits of 2880 / 12 going in to the uncrystallised account and regular monthly payments coming out of the crystallised pot. Each year take a tax free lump sum and have the rest top up the crystallised drawdown pot.

Pensionwise advice re SIPP ?

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