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  • FIRST POST
    • shilts
    • By shilts 15th Apr 18, 2:45 PM
    • 66Posts
    • 3Thanks
    shilts
    Drawdown after lump sum .
    • #1
    • 15th Apr 18, 2:45 PM
    Drawdown after lump sum . 15th Apr 18 at 2:45 PM
    After reading a similar thread about drawdown it got me thinking . I apologise if I am stating the obvious but upon retirement and having taken the 25% tax free lump sum if your drawdown amount and other income over the tax year falls below your personal allowance is this also tax free , thanks ?
Page 1
    • Dox
    • By Dox 15th Apr 18, 2:55 PM
    • 936 Posts
    • 718 Thanks
    Dox
    • #2
    • 15th Apr 18, 2:55 PM
    • #2
    • 15th Apr 18, 2:55 PM
    Happily yes.
    • shilts
    • By shilts 15th Apr 18, 2:56 PM
    • 66 Posts
    • 3 Thanks
    shilts
    • #3
    • 15th Apr 18, 2:56 PM
    • #3
    • 15th Apr 18, 2:56 PM
    As I thought , thanks .
    • ProDave
    • By ProDave 15th Apr 18, 3:44 PM
    • 1,056 Posts
    • 1,299 Thanks
    ProDave
    • #4
    • 15th Apr 18, 3:44 PM
    • #4
    • 15th Apr 18, 3:44 PM
    Which is why I am planning to get all mine out by drawdown between "retiring" and state pension age, during which time I should be able to get it all out tax free. Once state pension starts as well as private pensions, those will put me back over the tax threshold, so the opportunity to avoid tax will be lost.
    • Linton
    • By Linton 15th Apr 18, 3:52 PM
    • 9,721 Posts
    • 9,967 Thanks
    Linton
    • #5
    • 15th Apr 18, 3:52 PM
    • #5
    • 15th Apr 18, 3:52 PM
    It can be worth deferring your SP to fully drawdown a D.C. pot at minimum tax with excess going into S&S ISAs. This also gives you extra inflation linked income which could be very useful in extreme old age.
    • shilts
    • By shilts 15th Apr 18, 7:47 PM
    • 66 Posts
    • 3 Thanks
    shilts
    • #6
    • 15th Apr 18, 7:47 PM
    • #6
    • 15th Apr 18, 7:47 PM
    Thanks for help .
    • Bobbyg77
    • By Bobbyg77 1st May 18, 10:10 AM
    • 7 Posts
    • 0 Thanks
    Bobbyg77
    • #7
    • 1st May 18, 10:10 AM
    Drawdown held as cash
    • #7
    • 1st May 18, 10:10 AM
    Hi I,m in the same position ,I have takern the 25% but my cash is sat earning nothing.avviva are charging 0.4 % and only paying 0.41%.what other options have I got .is there a savings or is a option that will not involve me paying any tax.
    Thanks Bob
    • xylophone
    • By xylophone 1st May 18, 6:49 PM
    • 26,488 Posts
    • 15,729 Thanks
    xylophone
    • #8
    • 1st May 18, 6:49 PM
    • #8
    • 1st May 18, 6:49 PM
    Hi I,m in the same position ,I have takern the 25% but my cash is sat earning nothing.avviva are charging 0.4 % and only paying 0.41%.what other options have I got .is there a savings or is a option that will not involve me paying any tax.
    Thanks Bob
    The whole of your pension is now in cash?

    You could transfer to HL SIPP and pay no fee for holding cash?

    You are staying in cash because you want to draw down the income over only a couple of years?

    If not, what are your plans for this pension?

    How much is involved?

    When do you wish to access it?

    How old are you?

    Over how may years are you hoping to draw an income?

    What is your state pension/other pension/other income position?
    • Dazed and confused
    • By Dazed and confused 1st May 18, 9:28 PM
    • 2,907 Posts
    • 1,418 Thanks
    Dazed and confused
    • #9
    • 1st May 18, 9:28 PM
    • #9
    • 1st May 18, 9:28 PM
    Hi I,m in the same position ,I have takern the 25% but my cash is sat earning nothing.avviva are charging 0.4 % and only paying 0.41%.what other options have I got .is there a savings or is a option that will not involve me paying any tax.

    Interest from (non ISA) savings accounts is all taxable however you can have upto 6,000 in savings interest which could all be taxed at a 0% tax rate. The exact amount depends on your other income from pensions, wages etc but if you don't get enough from these sources to pay tax then it is likely to be the full 6,000.
    • Audaxer
    • By Audaxer 1st May 18, 10:09 PM
    • 1,278 Posts
    • 771 Thanks
    Audaxer
    Hi I,m in the same position ,I have takern the 25% but my cash is sat earning nothing.avviva are charging 0.4 % and only paying 0.41%.what other options have I got .is there a savings or is a option that will not involve me paying any tax.
    Thanks Bob
    Originally posted by Bobbyg77
    Surely it would be better earning interest even if some of that interest gets taxed, rather than earning nothing just so you don't pay tax?
    • Bobbyg77
    • By Bobbyg77 2nd May 18, 6:59 AM
    • 7 Posts
    • 0 Thanks
    Bobbyg77
    Ok I,m just over 61.the pot is worth over 50k.now fully retired.so taking out the money at the annual tax allowance rate ie 11.8 k per year.which without interest should last to 65 +.i would like to invest the money in a no risk savings in section ie.10 over 4 years,10 over3 years etc you see my plan .but what products are there .for a sip.
    • AnotherJoe
    • By AnotherJoe 2nd May 18, 7:36 AM
    • 10,585 Posts
    • 12,112 Thanks
    AnotherJoe
    Ok I,m just over 61.the pot is worth over 50k.now fully retired.so taking out the money at the annual tax allowance rate ie 11.8 k per year.which without interest should last to 65 +.i would like to invest the money in a no risk savings in section ie.10 over 4 years,10 over3 years etc you see my plan .but what products are there .for a sip.
    Originally posted by Bobbyg77
    There are very few if any. I have read that some SIPPs let you save cash in a linked bank account but yours isn't one of those (neither is mine) and I dont know which ones are.
    • Audaxer
    • By Audaxer 2nd May 18, 9:11 AM
    • 1,278 Posts
    • 771 Thanks
    Audaxer
    Ok I,m just over 61.the pot is worth over 50k.now fully retired.so taking out the money at the annual tax allowance rate ie 11.8 k per year.which without interest should last to 65 +.i would like to invest the money in a no risk savings in section ie.10 over 4 years,10 over3 years etc you see my plan .but what products are there .for a sip.
    Originally posted by Bobbyg77
    I see what you are trying to do, but bear in mind that you are already gaining a lot by managing to take all your SIPP money tax free. I don't think there is any way to keep that 50k capital absolutely safe for 4 years, and at the same time gaining decent interest on it inside the SIPP. I think the best strategy would be to take the 11.8k each year as a lump sum and put it in the highest interest current account(s), paying yourself monthly from that. Then you are at least getting some interest on the 11.8k each year until you spend it monthly.
    Last edited by Audaxer; 02-05-2018 at 9:13 AM.
    • Bobbyg77
    • By Bobbyg77 2nd May 18, 4:32 PM
    • 7 Posts
    • 0 Thanks
    Bobbyg77
    Interest
    Hi i,m looking for a fair rate not for a big interest. Rate,but how can they charge you for keeping 50k of your money.maybe this could be a ppi for the future.i feel it's just the government looking after there own.has anyone invested in bonds rather than keeping it in cash.open to all ideas to beat the system.
    • Bobbyg77
    • By Bobbyg77 2nd May 18, 4:42 PM
    • 7 Posts
    • 0 Thanks
    Bobbyg77
    Would you pay tax on the 11.8 k as soon as you take it only to have to claim it back later?.
    • xylophone
    • By xylophone 2nd May 18, 5:03 PM
    • 26,488 Posts
    • 15,729 Thanks
    xylophone
    how can they charge you for keeping 50k of your money.
    HL does not charge for holding cash.
    • AnotherJoe
    • By AnotherJoe 2nd May 18, 11:41 PM
    • 10,585 Posts
    • 12,112 Thanks
    AnotherJoe
    And neither, effectively, does Aviva from what the OP reported.0.41% interest, 0.4% charge. = 0.01% interest. Not a charge.

    OP keep it as cash, over just 4 years inflation losses won't be too bad. Unless you want to take a risk with some.

    There is no such thing as a risk free option..
    • Bobbyg77
    • By Bobbyg77 5th May 18, 7:58 AM
    • 7 Posts
    • 0 Thanks
    Bobbyg77
    Tax
    I see the plus side of taking the total tax allowance of 11.85k say April 10,but would they take 20% in tax at that time only for me to have to claim it back in the next tax year.?
    • Dazed and confused
    • By Dazed and confused 5th May 18, 9:59 AM
    • 2,907 Posts
    • 1,418 Thanks
    Dazed and confused
    No, on your first payment the emergency tax code should be used, on a non cumulative basis.

    If you had done this in April 2018 a taxable amount of 11,850 would have had tax deducted of 3,769.40.

    Refund of any excess tax can be claimed from HMRC.
    Last edited by Dazed and confused; 05-05-2018 at 10:10 AM.
    • NorthernGeezer
    • By NorthernGeezer 5th May 18, 10:04 PM
    • 143 Posts
    • 20 Thanks
    NorthernGeezer
    It can be worth deferring your SP to fully drawdown a D.C. pot at minimum tax with excess going into S&S ISAs. This also gives you extra inflation linked income which could be very useful in extreme old age.

    Any idea on the maths with this scenario?
    Does your deferred SP rise by a set amount per week year on year?
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