TFLS - Fidelity SIPP
MPN
Posts: 365 Forumite
I just turned 60 in June and am retired/non-earner. Currently I have approximately £145K in my Fidelity SIPP and I realise I should go into drawdown sometime before the end of this tax year in order to start moving money out of my SIPP and into my ISA account's (wife's and mine). This is mainly because I only have 7 years to switch the money across before I receive State Pension. Therefore, I intend to take out the 25% TFLS and then over the next 7 years my full personal allowance. I hold the same IT's/Funds in my ISA so its just a matter of switching the funds over.
My question is regarding the emergency tax code. Should I initially take out a small sum such as £500 to obtain a tax code before drawing down the full 25% TFLS and then my £11,500 personal allowance? Any views/thoughts on this would be appreciated. Thanks.
My question is regarding the emergency tax code. Should I initially take out a small sum such as £500 to obtain a tax code before drawing down the full 25% TFLS and then my £11,500 personal allowance? Any views/thoughts on this would be appreciated. Thanks.
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Therefore, I intend to take out the 25% TFLS and then over the next 7 years my full personal allowance.
Why take all the 25% up front? Can you not phase it and still achieve your objective? You may get more out that way tax free.My question is regarding the emergency tax code. Should I initially take out a small sum such as £500 to obtain a tax code before drawing down the full 25% TFLS and then my £11,500 personal allowance? Any views/thoughts on this would be appreciated
Dont see why you need to do that. It doesn't achieve anything other than double the admin for the sake of 4-6 weeks delay in getting the tax back.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Why take all the 25% up front? Can you not phase it and still achieve your objective? You may get more out that way tax free.
We don't need the money to spend but we cannot afford to put more money into our ISA accounts for next year. Therefore, I thought if I take the full 25% TFLS in March next year, my wife and I can then put £20K each into our ISA's into the same funds we are invested in in my SIPP?
Point taken about doubling the admin if it only takes 4-6 weeks to get the tax back. So would it be better to take out the 25% TFLS first or take out the 25% and my personal allowance at the same time in one installment next March?0 -
As long as you don't have any IHT concerns then, yes, you need to get as much money out of your SIPP and into your ISA's before you receive your state pension. However, you can always consider deferring your state pension, if you need more money out of your SIPP tax free?0
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As Dunston said don't worry about the tax rebate that will sort itself out, but you do need to get as much cash out of your SIPP and into your Isa's over the next 7 years until you receive SP.0
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This is what DH is planning on doing once he hits 55. But will probably just take PA (+ 25%) each year, with no lump sum first, as once his DB and SP come into play, he'll be paying tax.How's it going, AKA, Nutwatch? - 12 month spends to date = 2.31% of current retirement "pot" (as at end March 2024)0
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This is what DH is planning on doing once he hits 55. But will probably just take PA (+ 25%) each year, with no lump sum first, as once his DB and SP come into play, he'll be paying tax.
So do you think the UFPLS route is the best way? I'm just thinking I only have 7 years to take as much money out of my SIPP as possible to minimise tax on the remaining balance when I am receiving state pension. I can also use the money I take out to re-invest in the same funds in our ISA accounts (wife's and mine). This is because we don't have further money available for more ISA contributions so moving money from our SIPP to our ISA's seems sensible?0 -
Assuming your personal allowance would otherwise go unused, then it does indeed make sense .....and UFPLS may allow you to squeeze a little more tax free cash out, assuming your portfolio grows.....but you could also consider phased drawdown, where you put say £30k of your pot into drawdown each year, taking the 25% TFLS (£7.5k) and £11850pa as drawdown income.
Which is best is debatable tbh, and in the end there may be little difference overall in your circumstances, but some platforms charge less for UFPLS, which might save a few pounds over the years.
On deferring the state pension, you'd need to run some numbers to decide on that.....but there's probably no need to empty the SIPP (account charges notwithstanding).....even after state pension, you'll likely have some personal allowance left over each year.....so you could draw on the difference from the SIPP and still pay no tax, if that is your aim.0 -
PS.....don't forget that as a non-earner you can still contribute £2880pa to a pension and have the nice taxman add a further £720pa in tax relief......0
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Assuming your personal allowance would otherwise go unused, then it does indeed make sense .....and UFPLS may allow you to squeeze a little more tax free cash out, assuming your portfolio grows.....but you could also consider phased drawdown, where you put say £30k of your pot into drawdown each year, taking the 25% TFLS (£7.5k) and £11850pa as drawdown income(Quote)
With the phased drawdown option of say £30K, what would the OP do with the balance of around £10K in the drawdown pot? Does it stay invested or is just languishing in the drawdown pot?0
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