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  • FIRST POST
    • pantaiema
    • By pantaiema 9th Mar 18, 12:34 PM
    • 93Posts
    • 26Thanks
    pantaiema
    Cash ISA to SIPP?
    • #1
    • 9th Mar 18, 12:34 PM
    Cash ISA to SIPP? 9th Mar 18 at 12:34 PM
    I have accumulated about 40k in my cash paying interest of 2%+.
    I am already 55yo but still expect to work until my NPA which is 67yo. When I got retired I will still pay basic interest rate.

    Is there any disadvantages if I move my cash ISA INTO SIPP?.
    Could I put my cash ISA to Vanguard life strategy SIPP (if any?)
    I understand that my SIPP will get top up by 20%. This is similar rate I will be paying when I got retired anyway? Am I am correct?

    Thank
Page 1
    • dunstonh
    • By dunstonh 9th Mar 18, 12:40 PM
    • 92,649 Posts
    • 59,971 Thanks
    dunstonh
    • #2
    • 9th Mar 18, 12:40 PM
    • #2
    • 9th Mar 18, 12:40 PM
    Is there any disadvantages if I move my cash ISA INTO SIPP?.
    Accessibility will be slower. But that is mainly due to the switch from cash to investments. It is still possible to get access to money within an hour or two with the right provider and a bit of advance preparation (ie. after you have sold the funds and wait the 3-4 days for settlement). Whereas cash ISA is normally available there and then.

    Could I put my cash ISA to Vanguard life strategy SIPP (if any?)
    There is no such product. Vanguard operate a range of funds using the lifetstrategy name but a SIPP.

    I understand that my SIPP will get top up by 20%. This is similar rate I will be paying when I got retired anyway? Am I am correct?
    you can only pay in what you earn or 3600, whichever is higher (subject to an annual limit - avoiding caveats for simplicity at this stage ). What earnings do you have? (probably none if you are retired). If none, then you can only pay 3600 into a pension.

    You can still use the S&S ISA though.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Dazed and confused
    • By Dazed and confused 9th Mar 18, 1:05 PM
    • 2,566 Posts
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    Dazed and confused
    • #3
    • 9th Mar 18, 1:05 PM
    • #3
    • 9th Mar 18, 1:05 PM
    To be clear it's 3,600 per tax year, not 3,600 in totality.

    But as you would only be paying 2,880 yourself it would take quite some time to drop the full 40k into a SIPP.

    Obviously different if you have earnings and can pay more in each tax year.
    • mgdavid
    • By mgdavid 9th Mar 18, 2:21 PM
    • 5,594 Posts
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    mgdavid
    • #4
    • 9th Mar 18, 2:21 PM
    • #4
    • 9th Mar 18, 2:21 PM
    No, the OP said

    ....... I am already 55yo but still expect to work until my NPA which is 67yo. ..........
    Originally posted by pantaiema
    The questions that get the best answers are the questions that give most detail....
    • pantaiema
    • By pantaiema 9th Mar 18, 9:47 PM
    • 93 Posts
    • 26 Thanks
    pantaiema
    • #5
    • 9th Mar 18, 9:47 PM
    • #5
    • 9th Mar 18, 9:47 PM
    What about.
    - I put 3000 each year to SIIP
    - About 20. 000 go to S&S Isa
    - 17.000 go to flexible cash ISA (e. g combine with higher interest current account) and go back to flexible ISA before tax year is ending to maintain ISA status. Ready to be dropped to SIIP?.

    What is the disadvantages of doing this?
    Thanks again for your time.
    • Brynsam
    • By Brynsam 9th Mar 18, 10:06 PM
    • 956 Posts
    • 629 Thanks
    Brynsam
    • #6
    • 9th Mar 18, 10:06 PM
    • #6
    • 9th Mar 18, 10:06 PM
    What about.
    - I put 3000 each year to SIIP
    - About 20. 000 go to S&S Isa
    - 17.000 go to flexible cash ISA (e. g combine with higher interest current account) and go back to flexible ISA before tax year is ending to maintain ISA status. Ready to be dropped to SIIP?.

    What is the disadvantages of doing this?
    Thanks again for your time.
    Originally posted by pantaiema
    Can't work out what you are trying to achieve. Are you saying you can't afford to fund both a SIPP and an ISA?
    • pantaiema
    • By pantaiema 9th Mar 18, 10:43 PM
    • 93 Posts
    • 26 Thanks
    pantaiema
    • #7
    • 9th Mar 18, 10:43 PM
    • #7
    • 9th Mar 18, 10:43 PM
    Can't work out what you are trying to achieve. Are you saying you can't afford to fund both a SIPP and an ISA?
    Originally posted by Brynsam
    Already have about 40k cash ISA. But I understand I could only put 2880 a year into SIIP. SO the rest will need to go somewhere while waiting allocation to SIIP.
    • Brynsam
    • By Brynsam 9th Mar 18, 11:57 PM
    • 956 Posts
    • 629 Thanks
    Brynsam
    • #8
    • 9th Mar 18, 11:57 PM
    • #8
    • 9th Mar 18, 11:57 PM
    Already have about 40k cash ISA. But I understand I could only put 2880 a year into SIIP. SO the rest will need to go somewhere while waiting allocation to SIIP.
    Originally posted by pantaiema
    You say you expect to work to 67. Are you working at the moment and if so, how much are you earning?
    • xylophone
    • By xylophone 10th Mar 18, 4:45 PM
    • 25,374 Posts
    • 14,970 Thanks
    xylophone
    • #9
    • 10th Mar 18, 4:45 PM
    • #9
    • 10th Mar 18, 4:45 PM
    What are your "relevant earnings"?

    Are you already contributing to a workplace pension? If not, why not?

    https://www.rossmartin.co.uk/private-client-a-estate-planning/income-losses-claims-reliefs/1034-relevant-earnings-for-pensions-purposes
    • pantaiema
    • By pantaiema 10th Mar 18, 6:49 PM
    • 93 Posts
    • 26 Thanks
    pantaiema
    You say you expect to work to 67. Are you working at the moment and if so, how much are you earning?
    Originally posted by Brynsam
    What are your "relevant earnings"?

    Are you already contributing to a workplace pension? If not, why not?

    https://www.rossmartin.co.uk/private-client-a-estate-planning/income-losses-claims-reliefs/1034-relevant-earnings-for-pensions-purposes
    Originally posted by xylophone
    Yes. I am working at the moment and I am earning 55,000. I am still want to work until my NPA 67.

    I have A DB pension in the workplace pension and have maximised employer contribution. I have also top up my AVC of 4500 a year.
    • Brynsam
    • By Brynsam 10th Mar 18, 7:09 PM
    • 956 Posts
    • 629 Thanks
    Brynsam
    Yes. I am working at the moment and I am earning 55,000. I am still want to work until my NPA 67.

    I have A DB pension in the workplace pension and have maximised employer contribution. I have also top up my AVC of 4500 a year.
    Originally posted by pantaiema
    You can't 'maximise employer contribution' in a DB scheme - what the employer contributes is determined at each triennial valuation. As for topping up your AVC - do you mean you top it up BY (not OF) 4,500 a year?

    Given your earnings of 55,000 you appear to have scope to pay more than 2,800 a year to a SIPP without having Annual Allowance issues. Why do you think you are limited to 2,800?
    Last edited by Brynsam; 10-03-2018 at 7:12 PM.
    • pantaiema
    • By pantaiema 11th Mar 18, 8:10 PM
    • 93 Posts
    • 26 Thanks
    pantaiema
    You can't 'maximise employer contribution' in a DB scheme - what the employer contributes is determined at each triennial valuation. As for topping up your AVC - do you mean you top it up BY (not OF) 4,500 a year?

    Given your earnings of 55,000 you appear to have scope to pay more than 2,800 a year to a SIPP without having Annual Allowance issues. Why do you think you are limited to 2,800?
    Originally posted by Brynsam
    What I mean here is that in my workplace pension, I have contributed maximum where my employers also contribute. So even I contribute more my employer cannot contribute anymore.

    For that reason I do AVC of 4,500 pa. What is BY (OF) could you elaborate more?

    In post #2 and 3 it said I could only put my cash ISA to SIPP maximum of 2880?
    • robber2
    • By robber2 11th Mar 18, 8:25 PM
    • 345 Posts
    • 286 Thanks
    robber2
    You have misunderstood the SIPP contribution rules.
    Read this from #2 again slowly;

    "you can only pay in what you earn or 3600, whichever is higher (subject to an annual limit - avoiding caveats for simplicity at this stage ). What earnings do you have? (probably none if you are retired). If none, then you can only pay 3600 into a pension."

    rob
    • pantaiema
    • By pantaiema 12th Mar 18, 2:59 PM
    • 93 Posts
    • 26 Thanks
    pantaiema
    You have misunderstood the SIPP contribution rules.
    Read this from #2 again slowly;

    "you can only pay in what you earn or 3600, whichever is higher (subject to an annual limit - avoiding caveats for simplicity at this stage ). What earnings do you have? (probably none if you are retired). If none, then you can only pay 3600 into a pension."

    rob
    Originally posted by robber2
    Thanks. I see it now.
    I do not have SIPP at the moment. I am earning 55k
    Does it mean I could open a SIPP and then transfer all my cash ISA to SIPP. my cash ISA is currently about 40k.

    I currently have enough cash in my higher interest current account. Also I am still working. So I do not anticipate to use this cash for a foreseeable future.

    Putting it to SIIP I understand it will automatically get topped up by 20% from HMRC?

    Apart from access to cash is there any other disadvantages of moving a cash ISA into SIIP?

    Thanks
    • Dazed and confused
    • By Dazed and confused 12th Mar 18, 3:13 PM
    • 2,566 Posts
    • 1,234 Thanks
    Dazed and confused
    If the 55k is your taxable salary (your P60 pay amount) then you are likely to be able to claim some additional tax relief from HMRC on any SIPP contributions.

    These pension payments increase the amount of 20% tax you pay which in turn reduces the 40% tax charged.
    • xylophone
    • By xylophone 12th Mar 18, 5:15 PM
    • 25,374 Posts
    • 14,970 Thanks
    xylophone
    OP, are you saying that your "relevant earnings" are 55,000 per annum?

    https://www.rossmartin.co.uk/private-client-a-estate-planning/income-losses-claims-reliefs/1034-relevant-earnings-for-pensions-purposes

    See https://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/pensions-and-tax/tax-relief-and-contributions

    How much are you currently contributing to your workplace pension (gross)?

    What is the employer contributing?

    What kind of scheme is the workplace scheme? (Defined benefit/Defined Contribution).

    Is the "AVC" of 4500 a year gross or net?

    Have you obtained a new state pension statement?

    https://www.gov.uk/check-state-pension

    Have you signed up for a personal tax account?

    https://www.gov.uk/personal-tax-account
    • ukdw
    • By ukdw 13th Mar 18, 7:29 AM
    • 65 Posts
    • 38 Thanks
    ukdw
    Yes. I am working at the moment and I am earning 55,000. I am still want to work until my NPA 67.

    I have A DB pension in the workplace pension and have maximised employer contribution. I have also top up my AVC of 4500 a year.
    Originally posted by pantaiema
    I would be tempted to concentrate on reducing your top tax rate from 40% to 20% rather than tying up the whole 40k into a SIPP now. Because any withdrawals from the SIPP above the 25% tax free lump sum will invoke the Money Purchase Annual Allowance (MPAA) 4k contribution limit.

    This tax year you will still be paying 40% on 5.5k of your 55k after you take off the 4.5k AVC. So I would contribute 5.5k gross to a SIPP in the next few days to get into this years tax year. To contribute 5.5k gross that would cost you 4.4k out of your ISA.

    You could then after a few months get 1,375 of this back via a 25% tax free withdrawal and a further 25% back as 40% tax relief. So the total cost to you would be about 1,650. I would then leave the remaining 4,125 in your SIPP until after you stop working at 67 to avoid invoking the MPAA.

    If your AVCs are being done via salary sacrifice then due to the additional NI savings I would consider boosting your AVCs up to about 8700 to drop your 55k salary down to below next years 46,300 40% rate band. The extra 3300 AVCs would only actually cost you about 1900 due to the 40% tax and 2% NI savings - and this could be funded out of your ISA if you are short of cash.

    I would then leave the rest of the money in your ISA until a couple of years before you decide to stop working due to the greater flexibility this would give you.
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