Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • nxdmsandkaskdjaqd
    • By nxdmsandkaskdjaqd 3rd Jan 17, 8:39 AM
    • 604Posts
    • 83Thanks
    nxdmsandkaskdjaqd
    Paying 2880 into pension when retired
    • #1
    • 3rd Jan 17, 8:39 AM
    Paying 2880 into pension when retired 3rd Jan 17 at 8:39 AM
    Jamesd wrote in another thread the following:
    "She can make 720 a year tax free by paying 2880 net into a pension, having it grossed up to 3600 then withdrawing it. Can only do the withdrawing part from age 55. Can only pay in for this until age 75."

    I have just retired at 60 and have transferred my DC pension to a new SIPP. I plan to live off savings till state pension kicks in.

    I am correct that the above approach should be part of my strategy of being tax efficient?
    Last edited by nxdmsandkaskdjaqd; 03-01-2017 at 10:14 AM.
Page 47
    • busybee100
    • By busybee100 9th Nov 19, 8:33 AM
    • 1,367 Posts
    • 2,617 Thanks
    busybee100
    I deleted my earlier post as I felt I was posting too much information. I'll wait until she comes back and call H&L again.

    • nxdmsandkaskdjaqd
    • By nxdmsandkaskdjaqd 14th Jan 20, 1:52 PM
    • 604 Posts
    • 83 Thanks
    nxdmsandkaskdjaqd
    Tax Return
    I am currently completing a tax return where I have paid 2880 in to HL SIPP and received 720 in tax relief.

    Do I have to enter the 2880 in the Pensions section:
    Payments to registered pension schemes (Also known as PPR) where basic rate tax relief will be claimed by your pension provider (called Relief at source). Enter the payments and basic rate tax

    And do I also need to complete 3600 in the Pensions section:
    Pensions (other than State Pension), retirement annuities and taxable lump sums treated as pensions: (Optional)
    • Dazed and confused
    • By Dazed and confused 14th Jan 20, 8:08 PM
    • 6,140 Posts
    • 3,265 Thanks
    Dazed and confused
    Do I have to enter the 2880 in the Pensions section:
    Payments to registered pension schemes (Also known as PPR) where basic rate tax relief will be claimed by your pension provider (called Relief at source). Enter the payments and basic rate tax
    No, the guidance tells you to enter (in your example) 3,600.

    And do I also need to complete 3600 in the Pensions section:
    Pensions (other than State Pension), retirement annuities and taxable lump sums treated as pensions: (Optional)
    Have you received exactly 3,600 in pension income during 2018:19?
    • nxdmsandkaskdjaqd
    • By nxdmsandkaskdjaqd 14th Jan 20, 9:56 PM
    • 604 Posts
    • 83 Thanks
    nxdmsandkaskdjaqd
    Have you received exactly 3,600 in pension income during 2018:19?[/QUOTE]

    Yes that's correct.
    • Dazed and confused
    • By Dazed and confused 14th Jan 20, 10:02 PM
    • 6,140 Posts
    • 3,265 Thanks
    Dazed and confused
    Then include it in the pension income (other than State Pension) box.

    However your original post earlier today made no mention of pension income, it only referred to you making pension contributions.
    • nxdmsandkaskdjaqd
    • By nxdmsandkaskdjaqd 14th Jan 20, 10:09 PM
    • 604 Posts
    • 83 Thanks
    nxdmsandkaskdjaqd
    Yes I should have made that point. Thank you.
    • Audaxer
    • By Audaxer 14th Jan 20, 11:16 PM
    • 1,991 Posts
    • 1,237 Thanks
    Audaxer
    "Have you received exactly 3,600 in pension income during 2018:19?"

    Yes that's correct.
    Looking at the guidance notes for the form, under Box 11 - Pensions (other than State Pension), retirement annuities and taxable lump sums treated as pensions it says the following:
    "It also includes the taxable part of any:
    - 'uncrystallised funds pension lump sum' you withdrew under pension flexibility"

    Therefore if you took out the 3,600 as a UFPLS, I think that means the taxable part of the UFPLS which is 2,700, should go in Box 11. If 20% tax amounting to 540 was deducted from that, then that amount should go in Box 12 according to the instructions.
    • Dazed and confused
    • By Dazed and confused 14th Jan 20, 11:22 PM
    • 6,140 Posts
    • 3,265 Thanks
    Dazed and confused
    If they took 3,600 as a UFPLS payment then they wouldn't have had 3,600 pension income in the first place. Just 2,700.
    • Audaxer
    • By Audaxer 15th Jan 20, 10:05 AM
    • 1,991 Posts
    • 1,237 Thanks
    Audaxer
    If they took 3,600 as a UFPLS payment then they wouldn't have had 3,600 pension income in the first place. Just 2,700.
    Originally posted by Dazed and confused
    The way I understand it is that by taking a UFPLS of 3,600 they would be taking total pension income of 3,600 which comprises of 2,700 taxable income and 900 tax free income. Is that not correct?

    I assume the original poster is doing what a lot of people are talking about on this thread, i.e. paying 2,880 into a SIPP, leaving it as cash, and when the 720 tax relief is added, withdrawing 3,600.
    • nxdmsandkaskdjaqd
    • By nxdmsandkaskdjaqd 15th Jan 20, 10:10 AM
    • 604 Posts
    • 83 Thanks
    nxdmsandkaskdjaqd

    I assume the original poster is doing what a lot of people are talking about on this thread, i.e. paying 2,880 into a SIPP, leaving it as cash, and when the 720 tax relief is added, withdrawing 3,600.
    Originally posted by Audaxer
    Yes this is what I am doing, so need to complete the Tax Return correctly.
    • Dazed and confused
    • By Dazed and confused 15th Jan 20, 10:17 AM
    • 6,140 Posts
    • 3,265 Thanks
    Dazed and confused
    Self Assessment tax returns are all about taxable income.

    Previously, in relation to completing your tax return, you said you had 3,600 pension income.

    Are you now saying you only had 2,700 pension income?
    • nxdmsandkaskdjaqd
    • By nxdmsandkaskdjaqd 15th Jan 20, 11:02 AM
    • 604 Posts
    • 83 Thanks
    nxdmsandkaskdjaqd
    Self Assessment tax returns are all about taxable income.

    Previously, in relation to completing your tax return, you said you had 3,600 pension income.

    Are you now saying you only had 2,700 pension income?
    Originally posted by Dazed and confused
    I paid into the SIPP 2880 received 720 from the Tax Man and then withdraw 3600.

    Does that help in what I put in what boxes on the Tax Return?

    Just to add non tax payer.
    Last edited by nxdmsandkaskdjaqd; 15-01-2020 at 11:04 AM. Reason: added to
    • Dazed and confused
    • By Dazed and confused 15th Jan 20, 12:53 PM
    • 6,140 Posts
    • 3,265 Thanks
    Dazed and confused
    Not really.

    It could be 3,600.

    It could be 2,700.

    Have you not got a P60 from the pension payer?
    • clivep
    • By clivep 15th Jan 20, 1:05 PM
    • 440 Posts
    • 229 Thanks
    clivep
    The 25% tax free lump sum part of an UFPLS does not get entered on a tax return.

    For 2,880 paid in, this is grossed up by the 720 and 3,600 is the correct figure to enter on the tax return for contributions.

    For 3,600 taken out, 900 is tax free lump sum and the rest is taxable pension income so 2,700 is the correct amount to declare on the tax return.
    • Dazed and confused
    • By Dazed and confused 15th Jan 20, 1:10 PM
    • 6,140 Posts
    • 3,265 Thanks
    Dazed and confused
    At the moment I don't think we actually know the op is making withdrawals using UFPLS.

    They have stated twice the pension income is 3,600 so until the op can clarify exactly what they have done I don't think we are in a position to say the taxable income is only 2,700.

    It may be 2,700 but not necessarily.
    • nxdmsandkaskdjaqd
    • By nxdmsandkaskdjaqd 15th Jan 20, 1:41 PM
    • 604 Posts
    • 83 Thanks
    nxdmsandkaskdjaqd
    At the moment I don't think we actually know the op is making withdrawals using UFPLS.

    They have stated twice the pension income is 3,600 so until the op can clarify exactly what they have done I don't think we are in a position to say the taxable income is only 2,700.

    It may be 2,700 but not necessarily.
    Originally posted by Dazed and confused
    I am not sure. I can add it's a HL SIPP and I using the method described in this thread. So I paid into the SIPP 2880 received 720 from the Tax Man and then withdraw the 3600 in its entirety. I always leave 1000 in the SIPP as Cash (from previous years).

    Does this now help?

    I did speak to HL this year about a tax certificate but they stated that they do not do this anymore. So I copied the transactions from my HL Transactions Log.
    • Dazed and confused
    • By Dazed and confused 15th Jan 20, 2:20 PM
    • 6,140 Posts
    • 3,265 Thanks
    Dazed and confused
    Sadly not.

    I wasn't aware Hargreaves Lansdown could make up their own rules when it comes to tax requirements!

    HL should be able to tell you in a two minute phone call how your 3,600 was made up.

    From what you have posted it is either,

    3,600 taxable pension income
    or
    900 TFLS and 2,700 taxable pension income
    • nxdmsandkaskdjaqd
    • By nxdmsandkaskdjaqd 15th Jan 20, 2:56 PM
    • 604 Posts
    • 83 Thanks
    nxdmsandkaskdjaqd
    Sadly not.
    3,600 taxable pension income
    or
    900 TFLS and 2,700 taxable pension income
    Originally posted by Dazed and confused
    I have just spoken to HL. They say UFPLS was the method of withdraw.

    So 3,600 taxable pension income gets put on the tax return, is that correct?
    • Dazed and confused
    • By Dazed and confused 15th Jan 20, 3:48 PM
    • 6,140 Posts
    • 3,265 Thanks
    Dazed and confused
    No.

    They say UFPLS was the method of withdraw.
    Doesn't that mean it was split 25% TFLS (900) and 75% taxable income (2,700).
    • nxdmsandkaskdjaqd
    • By nxdmsandkaskdjaqd 15th Jan 20, 4:05 PM
    • 604 Posts
    • 83 Thanks
    nxdmsandkaskdjaqd
    No.

    Doesn't that mean it was split 25% TFLS (900) and 75% taxable income (2,700).
    Originally posted by Dazed and confused
    HL say that the above is correct. So what do I put in the boxes?
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

4,330Posts Today

6,124Users online

Martin's Twitter