Wow - that was quick
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Taking a PCLS doesn't trigger the MPAA. Placing money into a flexi-access drawdown account doesn't trigger the MPAA. The use of the small pots rule doesn't trigger the MPAA. It's entirely fine to do what I described.
The MPAA would be triggered if money from the drawdown account was flexibly accessed, meaning withdrawing without use of the small pots rule.
Doing what I described would use some lifetime allowance.
I dont want to use LTA as I am probably going to go over anyway, so an extra 3 x £10,000 = £30,000 on top of the standard LTA is useful to me. I have no LTA protection. My main AJ Bell Youinvest which I crystallised last month used 70% LTA and my DB (deferred defined benefit pension) from age 60 is likely to use the rest, if not slightly more.
EDIT: Before dunstonh, or anyone else, comments about the stupidity of crystallising all of the SIPP at 55, it was to use up as little LTA as possible to minimise its impact on my DB, assuming my SIPP grows faster than the LTA the LTA problem would have got worse had I not done this. This PCLS has paid off my mortgage, will pay for a new kitchen and will meet three years' worth of ISA contributions starting next April.0 -
I asked HL (Jess Jones) about this earlier this year and they flatly would not entertain it!Did you try asking for:
1. take benefit from £13333 in the form of 3333.25 PCLS and 9999.75 placed into flexi-access drawdown
2. use small pot rule on the 9999.75 flexi-access drawdown arrangement
She checked TWICE with colleagues and maintained that it wasn't allowed to use small pot from flexi-access funds. :eek:
HMRC manual suggests that it should be possible.
Care to put them straight for us James? :beer:
Scrounger0 -
I asked HL (Jess Jones) about this earlier this year and they flatly would not entertain it!
She checked TWICE with colleagues and maintained that it wasn't allowed to use small pot from flexi-access funds. :eek:
HMRC manual suggests that it should be possible.
Care to put them straight for us James? :beer:
Scrounger
If it uses up LTA, it doesnt seem to have much use? Whereas what they did for me has saved me 0.94% LTA with two more chances to come.0 -
Its main usefulness now is for people who have a need for pension money but who might work again. Say those who are sick or unemployed for an extended period who aren't committed to retiring.ffacoffipawb wrote: »If it uses up LTA, it doesnt seem to have much use?
Also useful sometimes for those who are about to retire and want to increase pension contributions because the money isn't a PCLS so isn't covered by the recycling rules.0 -
Its main usefulness now is for people who have a need for pension money but who might work again. Say those who are sick or employed for an extended period who aren't committed to retiring.
Fair point. Its only advantage over UFPLS is the lack of MPAA.
I am using small pots to reduce any LTA hit. I am only still contributing to my employer scheme because it is via salary sacrifice and our employer also passes on half their NI saving as well.
Incidentally, despite being told I couldn't partially transfer out of my works scheme, I am now told I can do this as long as I leave a nominal 0.2% left. I am therefore transferring about 90% to Hargreaves Lansdown. I will go for more risky funds here as it us all going to be in excess of LTA so may as well take punts on this.
I can also keep it separate from my drawdown account with Youinvest. They do not allow different funds for crystallised and uncrystallsed funds as they have it all in one account, notionally separated.
I guess I will transfer this to Hargreaves Lansdown at some point. When actually taking drawdown and using investment trusts the costs of both providers are pretty similar.0 -
It appears that Hargreaves Lansdown may be systematically misinforming customers who ask about this.I asked HL (Jess Jones) about this earlier this year and they flatly would not entertain it! ... She checked TWICE with colleagues and maintained that it wasn't allowed to use small pot from flexi-access funds. :eek: ... HMRC manual suggests that it should be possible. ... Care to put them straight for us James? :beer:
When I asked a few years ago I was told it wasn't allowed because I might add more money later... even though in my initial question I'dd quoted HMRC saying that such what if thinking shouldn't be done. I didn't have an immediate need so abandoned the discussion.
If you'd like to start a topic "Hargreaves Lansdown getting small pot rules wrong" and say what you have I'll work with you and maybe pass it on to an FT journalist as a possible story.0 -
So am I right in understanding you can get an extra £30k on your LTA by doing this? If so I'm surprised it's allowed.ffacoffipawb wrote: »HL will carve out £10k into a separate arrangement to take a small pot. They have just done this for me and it is not an UFPLS and uses no LTA and does not invoke MPAA. They have confirmed willingness to do this.
I will do another next year and another the year after that. Only three goes allowed.0 -
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Hopefully I still have two bites left at this cherry. Once next tax year and once the tax year after.
If they hadn't cut LTA I wouldn't have to mess around like this.0 -
Thanks James, well at least they're consistent. :rotfl:It appears that Hargreaves Lansdown may be systematically misinforming customers who ask about this.
When I asked a few years ago I was told it wasn't allowed because I might add more money later... even though in my initial question I'dd quoted HMRC saying that such what if thinking shouldn't be done. I didn't have an immediate need so abandoned the discussion.
If you'd like to start a topic "Hargreaves Lansdown getting small pot rules wrong" and say what you have I'll work with you and maybe pass it on to an FT journalist as a possible story.
Like you, I didn't have an immediate need and was merely checking for possible future use - especially as I was not aware of anybody who had actually done it.
I need to think about the last bit (and thanks for the offer). :beer:
Scrounger0
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