Offloading from SIPP to ISA?

[vrdiver]

Mrs VRD has some unused personal allowance for the current tax year. We're trying to work out whether it makes sense to sell some shares in her SIPP, withdraw the cash and put it into her ISA to rebuy the same shares - effectively moving a holding from the SIPP to the ISA.

When she reaches state pension age, she will become a tax payer again, so the logic is to use her current allowance to shelter a little bit more of her future earnings from tax.

LTA isn't relevant.

Advantages - reduce future tax burden.
Disadvantages - up front cost, ISA value would be considered should she need care home fees etc. ISA also adds to estate (for IHT purposes) whereas SIPP isn't.

The amounts are trivial, either way, but I was wondering what other people might do in similar circumstances?

Comments appreciated.

VRD

[Dod101]

If your wife can withdraw the cash from the SIPP free of income tax (you say she is currently a non tax payer) then I think that makes sense. She can then in future years withdraw cash from the ISA tax free irrespective of her personal tax position. As you say IHT will become a consideration but if the amount is trivial that can be disregarded. I do not much like a SIPP because the rules keep changing and of course withdrawing cash usually incurs a tax charge. She will have transaction charges but hopefully they too will be trivial.

Dod