Is this right

caveman38 · 10 April 2018 at 3:45PM

and what would the exact instructions be to the SIPP provider.

My wife intends to give up work 2 years before SP age at this December. She will have amongst other investments £50L in a SIPP as cash. She intends transferring that to HL to take advantage of their no fee cash SIPP before the end of this financial year.
She will have no earnings for 2 years before SP and intends drawing of this SIPP, leaving other investments alone.
If right she will (after April 6 1919) take the SIPP into drawdown and, a) take £12.5K tax free plus ask for <£1,000 a month payment. Assuming PA will then be £12K no tax should be taken from that payment.
Assuming that works OK a similar set up will be asked for the following year, but only perhaps £800 pm as she will have 3 months SP.
Is this correct and what should she say exactly to HL?

Mnd · 10 April 2018 at 4:02PM

Sounds right as long as the tax allowance is as you describe
Say to HL exactly what you have said here.they are very good

Mnd · 10 April 2018 at 4:06PM

Also why not consider deferring your wife's state pension and use all her annual allowance on her pension funds
You also can still pay in 2880 to gain more tax free cash as well
And also consider the married tax allowance as well if you pay basic rate tax.
I hope that this is all right as you are describing my situation now and my wife's in 4 years

caveman38 · 10 April 2018 at 4:07PM

What I meant was- instead of "Assuming PA will then be £12K no tax should be taken from that payment".
I'm hoping that no tax will be deducted by HL avoiding contact with IR to claim tax back.

Mnd · 10 April 2018 at 4:56PM

Read through several of the threads on here, I was a complete novice about all this and people have taught me a lot.
I only think I understand a little about the situation you are describing as that's what will be affecting us in the future. That's why I will only comment about this, anything more involved I leave to the experts who will help you.
Anyway, to answer your question directly..it seems that when you make the first withdrawal then hl will have to pay the tax on it which you can either claim back or wait for the tax people to pay it back in the fullness of time. The tax office will then issue a tax code to hl and they will use this for future payments.
One problem seems to be if you withdraw a large amount early in the year, they assume that you are going to take that amount every month and you may pay tax at 40% although you can claim it back.
They suggest that you do a modest withdrawal to start with, then when hl has your new code it can be paid taxfree
Everytime I phone or message hl they are very good and explain the options and consequences to me

Dox · 10 April 2018 at 4:57PM

caveman38 wrote: »

What I meant was- instead of "Assuming PA will then be £12K no tax should be taken from that payment".
I'm hoping that no tax will be deducted by HL avoiding contact with IR to claim tax back.

'Hope' and 'assume' are two verbs which should never appear in the context of anything to do with pensions, which is a fairyland all its own! Check first and if necessary get the answer in writing from HL or whichever provider you are using.

squirrelpie · 11 April 2018 at 12:02PM

Assuming that works OK a similar set up will be asked for the following year, but only perhaps £800 pm as she will have 3 months SP.

I don't think the situation will be 'similar', because by that time HL will have been given a tax code for you, plus she will be receiving '<£1000 a month' for over three years so will have already used up her personal allowance. And her tax codes will change again after her SP starts to be paid.

Is this right

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