swill453 wrote:No, the act of crystallisation includes giving you the 25% TFLS in cash.
So, thinking about another angle, it sounds like crystallisation necessarily
results in them giving you the 25% TFLS in cash, yes? But can you do a partial crystallisation if you don't want 25% of the full SIPP's value up front?
E.g. if your to-date-untouched SIPP is worth, say, £300K can you do a 40% crystallisation, £120K, in order to get £30K (25%) out tax free? And the remaining 60% remains uncrystallised?
lump sum sounds binary, either it's commenced or it hasn't, or is it possible (unlike pregnancy) to be "a little" commenced?
Exactly what you can do depends on what the SIPP provider offers. They have to abide by the law (naturally) but they don't have to offer complete flexibility. If your provider doesn't offer the flexibility you want then you can transfer it to one which does.
As far as the legal options go, you can:
- crystallise some or all of your SIPP
- of the amount crystallised, you can take anything from nothing up to 25% tax free up to £268,275 (cumulative maximum of all tax-free PCLS)
So you could crystallise 10% of your total SIPP and take 25% of that tax free (ie 2.5% of the total). Or Crystallise 10% and take none of it tax free if you really wanted to. Or somewhere between the two although it's hard to think of any scenario where it doesn't make sense to take the full 25% of the crystallised amount as tax free as long as it doesn't exceed the £268,275 total.
What you cannot legally do (and hence no provider will offer it) is to, eg, crystallise 10% now and take 25% of that at some later date - it's either take the tax free element immediately or forego it forever. That said, with SIPPS sufficiently over the old LTA of £1,073,100 it still isn't a binary choice since the excess might still allow you to claim the full £268,275 tax-free PCLS when you crystallise other amounts at a later date.
The only practical experience of this I have is with AJ Bell where you (a) decide how much you want to crystallise and (b) how much of the possible 25% you wish to withdraw as a tax-free lump sum.