Any Financial Experts?

V

VladKinder

Well-known member
Next year I will be 55 and retired.

I will have access to my SIPP which I've been paying £240 a month in (topped up to £300 with tax relief) for about 20 years.

The pot is not as big as my other tax efficient savings that I have in Cash and S&S ISAs.

When I'm retired I won't have any income except for about £3k a year via non-tax efficient investments.

Am I right in thinking that I won't have to pay tax on the SIPP if I start taking lump sums out of it because I will be well within my personal allowance?
Say If I took £13k a year out?

So basically the plan is:

To wind down my SIPP before I get my state pension at 67 because that is classed as taxable income.

Then at 67 live off my state pension and my ISA savings.

Would that work?

Obviously the plan is to pay as little tax as possible!

Cheers.
 
VladKinder said:
Next year I will be 55 and retired.

I will have access to my SIPP which I've been paying £240 a month in (topped up to £300 with tax relief) for about 20 years.

The pot is not as big as my other tax efficient savings that I have in Cash and S&S ISAs.

When I'm retired I won't have any income except for about £3k a year via non-tax efficient investments.

Am I right in thinking that I won't have to pay tax on the SIPP if I start taking lump sums out of it because I will be well within my personal allowance?

So basically the plan is:

To wind down my SIPP before I get my state pension at 67 because that is classed as taxable income.

Then at 67 live off my state pension and my ISA savings.

Would that work?

Obviously the plan is to pay as little tax as possible!

Cheers.
Click to expand...

I hope you've never criticised Lewis Hamilton for his tax affairs :ROFLMAO:
 
VladKinder said:
Next year I will be 55 and retired.

I will have access to my SIPP which I've been paying £240 a month in (topped up to £300 with tax relief) for about 20 years.

The pot is not as big as my other tax efficient savings that I have in Cash and S&S ISAs.

When I'm retired I won't have any income except for about £3k a year via non-tax efficient investments.

Am I right in thinking that I won't have to pay tax on the SIPP if I start taking lump sums out of it because I will be well within my personal allowance?

So basically the plan is:

To wind down my SIPP before I get my state pension at 67 because that is classed as taxable income.

Then at 67 live off my state pension and my ISA savings.

Would that work?

Obviously the plan is to pay as little tax as possible!

Cheers.
Click to expand...
Yes you can draw an income of part income and part tax free cash too, So, say if you wanted £20,000pa for a few years you could draw £12,570pa in income and £7,430pa in tax free cash without paying any tax (assuming you are not using your personal allowance elsewhere). If the above 3k is taxable income just scale back the above example by 3k from the £12,570pa.
 
Wouldn't an IFA be a better bet than a football messageboard to plan your finances for the rest of your life ?

I know there's some knowledgeable people on here, about all sorts, but this is a pretty important topic.
 
VladKinder said:
Next year I will be 55 and retired.

I will have access to my SIPP which I've been paying £240 a month in (topped up to £300 with tax relief) for about 20 years.

The pot is not as big as my other tax efficient savings that I have in Cash and S&S ISAs.

When I'm retired I won't have any income except for about £3k a year via non-tax efficient investments.

Am I right in thinking that I won't have to pay tax on the SIPP if I start taking lump sums out of it because I will be well within my personal allowance?
Say If I took £13k a year out?

So basically the plan is:

To wind down my SIPP before I get my state pension at 67 because that is classed as taxable income.

Then at 67 live off my state pension and my ISA savings.

Would that work?

Obviously the plan is to pay as little tax as possible!

Cheers.
Click to expand...
£13k would be over your personal allowance (£12,570) so you'd pay 20% tax on the £430. You can take a 25% tax free lump sum at the outset (as you know) either in full, or flexi-access drawdown, but it has to be from the outset I believe. As long as you stay below the tax free allowance, then I think you could draw it down tax free.

NB. As soon as you take a taxable pension withdrawal your annual allowance for pension contributions will reduce to a maximum of £4,000 per tax year. (So if you are still paying in to another pension pot, there could be implications).

Edit: This is not intended as investment advice. I am not an IFA. I am not regulated by the FSA. The value of pensions and investments can fall as well as rise :D:ROFLMAO:
 
Last edited:
Financial experts? Derby fans and the Second Tier podcast do a good job of knowing everything about ours 😂
 
You can take 25% of the value of your SIPP in tax free lump sums. If your ISAs are performing well then stick the maximum you are allowed in there every fiscal year (£20k I think) which keeps it free of all tax.

It's worthwhile investing some money annually to get the government top up every year. It's like a money merrygoround. Money into your SIPP to get the top up, money out of it tax free into your ISA, money out of your ISA to top up your ISA and repeat.

You do really need professional advice though.
 
I'm am IFA and you are pretty much on the right lines.. Assuming you have no other taxable income in the tax year you can potentially take out your nil rate band (usually £12,570) in 'taxable income' and any amount of your tax free cash ( up to 25% of the overall value) tax free. Taking £12,570 in taxable income would automatically provide you with c£4,190 tax free cash so you would have an overall tax free income of £16,760 (c£1,400 per month).

If you are planning on taking more income then using additional tax free cash and/or your ISA savings can be a smart move as it will keep the tax man from your door for longer too.

(All generically speaking of course with me not knowing your personal circumstances!!)

Hope that helps (y)
 
Last edited:
You only need an IFA if things are complicated. If they just recommend you do the most basic thing you are paying for nothing really. There are enough resources online, and I don't think asking other people's advice on sites like this is a bad thing, to figure out the basics.

Saying that, it depends how much they cost. If they are just confirming stuff for you then a small fee for that reassurance might feel worthwhile.
 
You must log in or register to reply here.
Back
Top