UFPLS and Drawdown

[piccadilly]

Can anybody tell me the difference between Uncrystallised Funds Pension Lump Sums (UFPLS) and flexible drawdown?

Thank You.

[swill453]

UFPLS is a subset of flexible drawdown.

Any new drawdown from a personal pension is, I believe, called flexible drawdown these days. UFPLS is a special case where the corresponding 25% tax free element associated with the drawdown amount is taken at the same time.

Scott.

[piccadilly]

Thank You.

Is it the case though, that every time a withdrawal is made say from a SIPP you would always take 25% of the amount as tax free?

[swill453]

Is it the case though, that every time a withdrawal is made say from a SIPP you would always take 25% of the amount as tax free?

If the SIPP is uncrystallized then yes, you could/would take UFPLS payments with 25% tax free.

If it's crystallized already because you've had your tax free lump sum, then obviously you couldn't.

Scott.

[DrBunsenHoneydew]

Thank You.

Is it the case though, that every time a withdrawal is made say from a SIPP you would always take 25% of the amount as tax free?

Yes, Unless you're up against the Lifetime Allowance and / or complications around age 75 rules. What tax is deducted at the time of payment depends on what tax code they hold and might be an Emergency Code that would over-deduct and mean you'd have to reclaim it.

[taken2often]

UFPLS is most attractive to those who do not need the lump sum. Depending on how you draw will determine the life of the fund and whether
anything is left, to pass on. I suggest drawing 80% of income leaving 20% to grow. So later in life if you need larger sums it is available.
With dividend growth your 80% sum could increase each year.

Bob

[piccadilly]

Thank you for your answers.

Is the choice with flexible drawdown to take the 25% tax free up front ,or draw it in stages ,leaving the balance to accumulate within the SIPP (and subject to tax) when it is needed?

And with UFPLS, to draw it as needed 25% tax free and 75% subject to tax?

Does anybody use a particular provider to manage the drawdown?

[swill453]

Thank you for your answers.

Is the choice with flexible drawdown to take the 25% tax free up front ,or draw it in stages ,leaving the balance to accumulate within the SIPP (and subject to tax) when it is needed?

And with UFPLS, to draw it as needed 25% tax free and 75% subject to tax?

Yes pretty much. I'm drawing down £1277 per month this tax year as UFPLS. With no other income that ensures I make use of my full personal allowance but pay no tax whatsoever.

Does anybody use a particular provider to manage the drawdown?

I use AJBell Youinvest. Have had a few issues but not enough to make me leave.

Scott.

[piccadilly]

Thank you for your answers.

Is the choice with flexible drawdown to take the 25% tax free up front ,or draw it in stages ,leaving the balance to accumulate within the SIPP (and subject to tax) when it is needed?

And with UFPLS, to draw it as needed 25% tax free and 75% subject to tax?

Yes pretty much. I'm drawing down £1277 per month this tax year as UFPLS. With no other income that ensures I make use of my full personal allowance but pay no tax whatsoever.

Does anybody use a particular provider to manage the drawdown?

I use AJBell Youinvest. Have had a few issues but not enough to make me leave.

Scott.

Scott,

Thank you for confirming my understanding.Based on your figures - the £1,277 per month equates to £15,324 per annum 75% of this is £11,500 which equates to the tax free allowance.

Regards

[swill453]

the £1,277 per month equates to £15,324 per annum 75% of this is £11,500 which equates to the tax free allowance.

Yep that's right.

Scott.

[piccadilly]

Many thanks for your response ,your time and going to the trouble.

This has aided my understanding.