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  • FIRST POST
    • bowlhead99
    • By bowlhead99 11th Mar 17, 8:14 PM
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    bowlhead99
    Taking first UFPLS from a small Hargreaves Lansdown SIPP
    • #1
    • 11th Mar 17, 8:14 PM
    Taking first UFPLS from a small Hargreaves Lansdown SIPP 11th Mar 17 at 8:14 PM
    To avoid taking the long "2880 into pension when retired" thread into more sidetracks on specific providers...

    Mum's SIPP was set up a couple of months ago so the 720 tax relief on her 2880 contribution has not yet been received but is due to be credited later this month. Not a problem as only looking to take out about 2500-2600 total this tax year via UFPLS and leave 1k in the account, putting more in next tax year up to the annual limit for non earners. She already has online access to it alongside her ISA and can see the cash in the account.

    First step was to go to the HL page for 'taking lump sums' and fill the form to request an info pack "The pack will explain UFPLS in more detail and also include details of how to apply. Request your copy today by completing your details"
    Then presumably the pack tells you how to do it.

    Dad reckons he's received a couple of packs/forms in the post today after doing that: one seems to be for setting up a SIPP and opening an account, giving them ID documentation etc - presumably irrelevant as the SIPP is already established ; another explaining the process for Drawdown etc.

    One form is headed "priority request: retirement options"; below the simple stuff like name, address etc on that form there's boxes for 'pension details for annuity and drawdown options : value / expected retirement date / how much tax free lump sum would you want' ; then it goes on to 'please post me: more details on annuities inc an annuity quote / more details on drawdowns inc a personal illustration / more details on lump sums (UFPLS pack)'.

    Then there is a separate white form "What next: risk factors to consider when taking a lump sum (UFPLS) from a pension" - which is basically a questionnaire on whether you have had advice, do you understand this, that, and the other risk factors around taking lumpsums. At the bottom of the risk questionnaire it has "thank you now return the form in the prepaid envelope or call us on xxxx ;" and space for an email address in "send my application by email".

    As I'm attempting to field his questions without the forms in front of me (because they came through post rather than electronically for easy sharing) -I am not sure if the first form might not be needed (we do just want a UFPLS application pack, which is why we filled out the online application for a lump sum information pack...) and the second form sounds like the key one to sign off on the risks so they will send the application form through. But perhaps the first form I described is needed to act as a covering letter for the UFPLS risk questionnaire to be sent to them and then they will fire out another form.

    The idea is not to take money out via drawdown (as we are out of time this tax year for anything to go month by month) but just to grab (say) 2600 of the soon-to-be 3600 in the SIPP and take it out using the standard 25%/75% taxfree / taxable split.

    I wasn't sure if this is just the first bit of a lengthy process to put in some details and get an illustration and then eventually be able to click some buttons online to extract cash, or whether the next form that follows will be the proper application to send off in the post again to extract cash, or whether there should already be another piece of paper in the pack at this stage to actually constitute a request for a UFPLS of x to be sent to the registered bank account.

    I had suggested they try to do this earlier in the year to avoid missing the cutoff to get a payout close to the 2016/17 deadline (having heard that drawdowns are paid on the xth of a month and need to be requested by the yth of the month), but we are where we are. My hope is that a one off UFPLS - as distinct from a regular ongoing drawdown - is something that can be done on an adhoc basis before 5 April if HL were to get the current batch of forms by early next week and then if necessary, the formal application the week after.

    The timeline is compressed a bit as they are travelling away for a week from first thing monday. I wasn't sure if perhaps they can do the questionnaire over the phone, then get the proper application form over email, then get that sent in first thing Monday and have a better chance of getting the cash through to count as 2016/17 income.

    Any other experiences or comments about whether I'm on the right track would be handy. I know how UFPLS works and all the tax consequences, it's just the process with this particular provider.

    Thanks
Page 3
    • Dazed and confused
    • By Dazed and confused 3rd Apr 17, 8:45 PM
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    Dazed and confused
    That does look like the emergency tax code has been used on what i presume is a taxable amount of 1050.
    • Nationwide8
    • By Nationwide8 3rd Apr 17, 8:50 PM
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    Nationwide8
    That does look like the emergency tax code has been used on what i presume is a taxable amount of 1050.
    Originally posted by Dazed and confused
    ???? and that gives a figure of 26.40 ???
    • coyrls
    • By coyrls 3rd Apr 17, 9:00 PM
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    coyrls
    ???? and that gives a figure of 26.40 ???
    Originally posted by Nationwide8
    Did you ask for UFPLS? In an earlier post you said

    Thanks for the above,am still waiting to see if the small withdrawal I requested last week over and above the 25% will be processed in this tax year
    Which implied that you asked for the full 25% tax free on your total plus an additional withdrawal. If this is the case, then 25% of 3,600 is 900, the full amount withdrawn was 1,400, leaving 500 to be taxed. Your 26.40 tax would be on the 500 withdrawal.
    Last edited by coyrls; 03-04-2017 at 9:08 PM. Reason: spelling
    • Nationwide8
    • By Nationwide8 3rd Apr 17, 9:12 PM
    • 335 Posts
    • 136 Thanks
    Nationwide8
    Did you ask for UFPLS? In an earlier post you said

    Which implied that you asked for the full 25% tax free on your total plus and addittional withdrawal. If this is the case, then 25% of 3,600 is 900, the full amount withdrawn was 1,400, leaving 500 to be taxed. Your 26.40 tax would be on the 500 withdrawal.
    Originally posted by coyrls
    Thank you,I requested a UFPLS withdrawal of 1400,and if that withdrawal could be completed within 16-17 tax year,that's it,i didnt specify or ask for the 25% tax free,I just assumed HL would work that out and tax me on the remainder.

    So 500 = 26.40 tax ...approx 5 % ???

    Edit,stab in the dark...would HL already know I was a non tax payer even though this is my first withdrawal and somehow thats why the tax is so low ????
    Last edited by Nationwide8; 03-04-2017 at 9:19 PM.
    • Dazed and confused
    • By Dazed and confused 3rd Apr 17, 9:19 PM
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    Dazed and confused
    Alternatively you have taken 1400 of which

    350 is tax free
    1050 is taxable on which tax appears to have been calculated as below,

    917.40 with no tax (emergency tax code of 1100L for 2016:17 calculated for a monthly payment)
    132 to be taxed = 26.40

    The actual tax due will depend on your own personal circumstances!!!8203;, basic rate payer would owe HMRC an additional 183.60
    • ffacoffipawb
    • By ffacoffipawb 3rd Apr 17, 9:33 PM
    • 2,467 Posts
    • 1,625 Thanks
    ffacoffipawb
    Thank you,I requested a UFPLS withdrawal of 1400,and if that withdrawal could be completed within 16-17 tax year,that's it,i didnt specify or ask for the 25% tax free,I just assumed HL would work that out and tax me on the remainder.

    So 500 = 26.40 tax ...approx 5 % ???

    Edit,stab in the dark...would HL already know I was a non tax payer even though this is my first withdrawal and somehow thats why the tax is so low ????
    Originally posted by Nationwide8
    OK

    Tax Free Allowance = 11,000 = 916.67 per month

    Tax due = ([1,400 - 350 (tax free) ] - 916.67) * 20% = 26.67

    Close enough.
    • faddy
    • By faddy 3rd Apr 17, 9:35 PM
    • 466 Posts
    • 52 Thanks
    faddy
    I could probably work this out by trawling through this thread, but how soon after opening a HL SIPP would I be able to withdraw a UPFLS allowing for forms going back and forth? Would I be able to withdraw the whole amount paid in (taxed at 15%?) before the HMRC top up arrives? I'm assuming HL wouldn't close the account knowing a top up was on its way?
    • Nationwide8
    • By Nationwide8 3rd Apr 17, 9:51 PM
    • 335 Posts
    • 136 Thanks
    Nationwide8
    Alternatively you have taken 1400 of which

    350 is tax free
    1050 is taxable on which tax appears to have been calculated as below,

    917.40 with no tax (emergency tax code of 1100L for 2016:17 calculated for a monthly payment)
    132 to be taxed = 26.40

    The actual tax due will depend on your own personal circumstances!!!8203;, basic rate payer would owe HMRC an additional 183.60
    Originally posted by Dazed and confused
    Thank you ........
    • Nationwide8
    • By Nationwide8 3rd Apr 17, 10:03 PM
    • 335 Posts
    • 136 Thanks
    Nationwide8
    OK

    Tax Free Allowance = 11,000 = 916.67 per month

    Tax due = ([1,400 - 350 (tax free) ] - 916.67) * 20% = 26.67

    Close enough.
    Originally posted by ffacoffipawb
    Thank you,I think you and Dazed and Confused have explained it...

    I trust HL of course to have it right but I like to understand

    Learning curve......
    • Nationwide8
    • By Nationwide8 3rd Apr 17, 10:15 PM
    • 335 Posts
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    Nationwide8
    Hmmm just thought of something,my private pension amount monthly would take a chunk out of that monthly allowance of 917 ?? Which would leave more to be taxed on ?? But is that up to HMRC to work out not HL ?

    btw,This one lump sum SIPP withdrawal and my private pension together for tax year 16-17 isn't above my PA so any tax I will be claiming back.
    Last edited by Nationwide8; 03-04-2017 at 10:37 PM.
    • bowlhead99
    • By bowlhead99 4th Apr 17, 12:59 AM
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    bowlhead99
    Hmmm just thought of something,my private pension amount monthly would take a chunk out of that monthly allowance of 917 ?? Which would leave more to be taxed on ?? But is that up to HMRC to work out not HL ?

    btw,This one lump sum SIPP withdrawal and my private pension together for tax year 16-17 isn't above my PA so any tax I will be claiming back.
    Originally posted by Nationwide8
    The whole point of them giving you an 'emergency' tax code is that they don't know if you have a private pension amount monthly which was using up some of your allowance or nothing at all using up your allowance. They are just saying what tax do we withhold when we know nothing about this person other than we are paying them 1400 this month of which 1050 is taxable.

    The assumption is that if they carry on paying you a taxable income of 1050 a month that's 12600 a year and you would be getting the first 11000 at 0% with 1600 at 20%... so they better withhold tax at 20% on 1600 a year which is 26 a month. It's a guess.

    Yes of course if some other job or pension was using up all the 11000 and you were really getting 12600 a year from HL, perhaps they should be taxing you a lot more - but as in fact you are not going to be over the personal allowance with this lump sum withdrawal because it's a one-off and not recurring, it's worked out quite neatly and there's not much to claim back as it happens.


    I could probably work this out by trawling through this thread, but how soon after opening a HL SIPP would I be able to withdraw a UPFLS allowing for forms going back and forth?
    Originally posted by faddy
    The key takeaways if you don't want to read the thread are:

    - you can fund your account via debit card as part of the account opening process online.

    - if you make a contribution up to and including the 5th of a month it will be taken into account for that month's tax relief claim to HMRC and then be credited to your account on the 21st of the following month (or next working day).

    - to withdraw via UFPLS you have to complete the risk questionnaire and get it back to them, which you can either do by clicking on their website to get it sent in the post, filling it out and posting it back, or by phoning them and talking through it and answering the questions after going through security to check it's you.

    - after they have the completed risk questionnaire they can send you the application form for a UFPLS withdrawal which will arrive in a day or two by post or within a few minutes / hours by email. Then you can fill it out and sign and return it in the post with copy of your ID. Once this reaches them by post if all is in order it might take 3-4 working days for the funds to show as withdrawn from your online account and credited to your bank with the tax deduction.

    Would I be able to withdraw the whole amount paid in (taxed at 15%?) before the HMRC top up arrives? I'm assuming HL wouldn't close the account knowing a top up was on its way?
    They won't close the account while they are waiting for money which is owed to your account by HMRC. Meanwhile you could take out every other penny that was sitting in your account if you wanted (i.e. your contributions plus interest or investment returns).

    However, if you do that (drain the account) and you had only done a contribution amount of 2880 like the other people in this thread, the outstanding tax claim is only 720 ; once that arrives it will be available for you, but your account will be below the 1000 minimum below which they reserve the right to close your account, and if you have maxed out your contribution allowance you will not be able to top it up until the next tax year so your account is sitting there at risk of closure.

    If you don't invest the 720 tax relief when it arrives and plead with them not to close the account because you are definitely going to add more to it next tax year, honest guv... they may just unilaterally decide they will close the account and charge you a 295+vat (~350) fee, which is their charge for early account closure within a year of opening the account.

    You might prefer to avoid that crippling fee by making sure there is more sloshing around in the account than 720. For example only take out 2600 of your 2880 and then leave 280 which together with the 720 incoming claim makes 1000 sitting in the account to keep the account ticking over until it has been open long enough to avoid the 'early closure' fee and just pay the standard 25+vat fee.

    It remains to be seen what attitude they take to their 1000 minimum limit which is a relatively new one. It just gives them some "terms and conditions" support if they decide they want to close down your account because you are taking the mick by making them work for free when you don't actually want any investments. Being a guinea pig to find out what circumstances they'll really go ahead with it, could be an expensive lesson.
    • Nationwide8
    • By Nationwide8 4th Apr 17, 9:03 AM
    • 335 Posts
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    Nationwide8
    Yet again thanks bowlhead ^^^ Yes I understand about the private pension,just last night in the midst of my mind whirring I got worried

    Thanks to those who explained the figures last night,initially just could not work out the figures as they are worked out in a way I would never have guessed but now I've slept on it,i understand it.That said if I hadn't have come on here in the first place wouldn't have had a clue about SIPPs or be brave enough to take the plunge....OR realised how the figures are worked out.

    Hopefully all to do again next ( 17-18 ) tax year when I'll withdraw more than in the 16-17 tax year.
    Last edited by Nationwide8; 04-04-2017 at 9:49 AM.
    • Nationwide8
    • By Nationwide8 4th Apr 17, 11:56 AM
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    Nationwide8
    Is it form P55 you fill in to claim tax back ? ....and about what time do people fill it in ? Jan,Feb,March ?? Am talking for 17-18 tax year here.
    Won't worry about the 26 tax owed from 16-17 tax year as I'll just claim it when I get my annual tax statement about October.

    Never having filled any tax form in just trying to "nail" the whole process down in my head.
    • faddy
    • By faddy 4th Apr 17, 3:10 PM
    • 466 Posts
    • 52 Thanks
    faddy
    Thanks for the comprehensive reply

    - to withdraw via UFPLS you have to complete the risk questionnaire and get it back to them, which you can either do by clicking on their website to get it sent in the post, filling it out and posting it back, or by phoning them and talking through it and answering the questions after going through security to check it's you.
    Originally posted by bowlhead99
    Does it have to be account holder in person doing phone risk questionnaire, or could my wife answer security questions then leave the talking to me? Or is it just a question of saying "yes I understand" to everything?

    - after they have the completed risk questionnaire they can send you the application form for a UFPLS withdrawal which will arrive in a day or two by post or within a few minutes / hours by email. Then you can fill it out and sign and return it in the post with copy of your ID. Once this reaches them by post if all is in order it might take 3-4 working days for the funds to show as withdrawn from your online account and credited to your bank with the tax deduction.
    So a week from opening account to getting money back in the bank wouldn't be an unreasonable target?

    if you have maxed out your contribution allowance you will not be able to top it up until the next tax year so your account is sitting there at risk of closure.
    If you did - accidentally or deliberately - add to the account in excess of the limit, would you get a tax top up which HMRC would eventually claw back, but still pay tax when withdrawing the excess?

    It just gives them some "terms and conditions" support if they decide they want to close down your account because you are taking the mick by making them work for free when you don't actually want any investments. Being a guinea pig to find out what circumstances they'll really go ahead with it, could be an expensive lesson.
    Is it known whether they give any warning - and opportunity to pay in more if contribution allowance permits - before closing?
    • Audaxer
    • By Audaxer 6th Mar 18, 10:40 AM
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    • 607 Thanks
    Audaxer
    This is an interesting thread I have found from a year ago, about taking a first UFPLS from a small HL SIPP, which I am about to do, and I guess some others may be in the same position.

    I have 3,600 cash in my HL SIPP that I opened a few months ago, and plan to withdraw a UFPLS lump sum before the end of the tax year as I am well below my Personal Tax Allowance limit this year.

    I am surprised that you can't seem to do it all online, so I'm glad I checked now to ensure I get it processed before the end of the tax year. From what I understand the process works as follows:
    - I can take out a maximum of 2,600 out as I need to leave in a minimum balance of 1,000 if I don't want the SIPP to be closed.
    - I will need to phone HL and answer questions on a risk assessment over the phone about taking out a UFPLS. They will then send me a form through the post that I will need to complete, sign and send back for them to process the UFPLS.
    - The payment will be taxed on an emergency code and sent to my bank account, but I will be able to claim the tax back from HMRC as I am well under the Personal Tax Allowance for this tax year.

    Does that sound correct or am I missing anything?
    • Rob749
    • By Rob749 7th Mar 18, 7:55 PM
    • 24 Posts
    • 2 Thanks
    Rob749
    UFPLS payout
    Yes, thats all correct. did the same for my wife last year, will do it again this tax year. Emergency tax paid, and then claimed back on Form P55. Think I did it online. Duly received refund after a few weeks. Once that was done, wife received tax code, and at the year end a tax statement listing income from HL, so next time tax will be automatically deducted at the proper rate. Free money !
    • Rob749
    • By Rob749 7th Mar 18, 7:59 PM
    • 24 Posts
    • 2 Thanks
    Rob749
    Update on my post earlier
    Filled out form P55 online, but had to print and send I think. Unless systems have been updated since !
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