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    • sunnyjim1234
    • By sunnyjim1234 19th Mar 17, 6:57 PM
    • 28Posts
    • 3Thanks
    TFLS recycling rules.
    • #1
    • 19th Mar 17, 6:57 PM
    TFLS recycling rules. 19th Mar 17 at 6:57 PM
    Hello again.

    I'm back looking for some more advice.
    I am 54 and on the verge of early retirement. I am selling my shares in a small business and want to take one last opportunity to funnel some of the proceeds into a SIPP in order to take advantage of some 40% Tax relief. I have got plenty of carry forward allowance, and enough relevant earnings at 40% tax rate, that I could make a Pension contribution of 36k net, which would be grossed up to 45k, and could claim back 9k tax relief via self assessment.
    ( I have had this confirmed by my accountant, so I am reasonably confident that it is feasible)
    What I am concerned about, is falling foul of the pension recycling rules. If I make a substantially increased pension contribution before the end of this financial year, and at some point in the next couple of years I access some tax free cash, is this likely to be viewed by HMRC as recycling, or is the fact that the contribution could be shown to have been funded by cash from the sale of shares and that the increased contributions are just part of normal retirement planning enough to avoid the risk of taking an unauthorised payment?

    Thanks in anticipation.
Page 1
    • kidmugsy
    • By kidmugsy 19th Mar 17, 10:24 PM
    • 10,577 Posts
    • 7,235 Thanks
    • #2
    • 19th Mar 17, 10:24 PM
    • #2
    • 19th Mar 17, 10:24 PM
    There's some provision in the rules to the effect that they have no desire to interfere with what they call normal retirement planning. That may be a get out.

    But I last read the rules when I retired so you'd have to check to see whether they've changed. Often the websites of the big insurance companies are helpful with this sort of thing.

    P.S. From MoneySavingUser on a different thread:
    Last edited by kidmugsy; 19-03-2017 at 10:27 PM. Reason: P.S.
    • hennerz
    • By hennerz 19th Mar 17, 11:36 PM
    • 172 Posts
    • 32 Thanks
    • #3
    • 19th Mar 17, 11:36 PM
    • #3
    • 19th Mar 17, 11:36 PM
    There hasn't been a payment of a tax free cash sum yet though?
    • sunnyjim1234
    • By sunnyjim1234 20th Mar 17, 7:25 AM
    • 28 Posts
    • 3 Thanks
    • #4
    • 20th Mar 17, 7:25 AM
    • #4
    • 20th Mar 17, 7:25 AM
    There hasn't been a payment of a tax free cash sum yet though?
    Originally posted by hennerz
    True, but apparently HMRC can look at the two years previous to taking the TFLS
    • Linton
    • By Linton 20th Mar 17, 9:26 AM
    • 9,387 Posts
    • 9,519 Thanks
    • #5
    • 20th Mar 17, 9:26 AM
    • #5
    • 20th Mar 17, 9:26 AM
    The only, possibly theoretical, example of HMRC looking back in time which I have seen quoted is where one gets a loan to make the pension contribution and then pays off the loan with the TFLS. In your case there appears to be no financial link betweek the two transactions so I would think you are safe. I suspect you wont get anyone to make an absolutely definitive statement here as the rules dont seem to be clearly defined.
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