68 Year old - Starting Pension ? - Contribute and then cash out ?

If he has no earnings then in each tax year he can contribute £2,880 net. The taxpayer makes this up to £3,600 (it often takes a couple of months for the £720 to arrive at the provider). Then he can take the money out as soon as he likes.

Three caveats.

(i) 75% of the money - £2,700 - will be taxable. Whether it should be taxed depends on his other income.
(ii) Even if that money should pay no tax, it may have to pay at an emergency rate and he will then have to claim the tax back. Someone will probably be along shortly to tell you how to avoid this complication.
(iii) If he withdraws all £3,600 only a few weeks after opening the account he might find himself paying the provider a fee for early closure. This can often be avoided by leaving some suitable sum behind for the future. You need to read the T&Cs and the list of charges.

http://www.hl.co.uk/help#sipp,-drawdown-and-annuity/sipp

http://www.hl.co.uk/pensions/sipp/charges-and-interest-rates

darren72 wrote: »

He is on a low income and although he is a tax payer he is not currently paying much. I assume the same applies in this case.

Can this be done each tax year for the £720 bonus ?

If he's already a taxpayer then he'll have to pay 20% tax on the £2,700. That reduces his gain from £720 to £180. Then subtract any fees that might apply (which depends on the provider). Is it worth doing? Opinions will differ.

Yes, he can do it each tax year.

kidmugsy wrote: »

Hargreaves Lansdown are a good bet. As long as he leaves his money as cash and doesn't invest it they have zero annual charges for people who say they are happy to get their statements online.

But beware "Early account closure fee £295 + VAT" - don't accidentally close the account too early. Their phone service is very good: if you have any questions when you've finished studying their website just give them a bell.

With HL it's worth doing but you need to leave £1,000 in to keep the SIPP open. If he is well under the personal tax allowance he will be able to claim any tax charged back. So for the first year he will be able to withdraw by a UFPLS £2,600 after the tax credit is added to leave a balance of £1,000. Every year thereafter until he is 75 he can pay in £2,880 and get a tax credit of £720 which will take the total balance to £4,600. He can then withdraw £3,600 making £720 profit and pay in the remaining £2,880 the following year and do the same in future years.