Is ISA->SIPP->ISA OK?
Posted: March 6th, 2021, 9:09 pm
Hi. I'd be grateful if people could confim that my plans are sensible (and legal) please
Context is :
I'm hoping to retire (early) in a few years time.
Once SP kicks in we should have enough db pension to be sure we can live reasonably well
I want to be very sure that we have sufficient cash to cover the gap between retirement and SPA, regardless of equity and stock markets
I'm already adding money to SIPP to avoid paying 40% tax but nowhere near hitting SIPP limits
Plan is:
In the run up to retirement look at "bed & SIPP". By which I mean sell equity in ISA and buy back in SIPP (with cash cushioning between the two).
After retirement start pulling money back from the SIPP, possibly to (re)invest in equity ISA, or just to replenish cash reserves
Rationale:
If I move an extra £16k cash in to the SIPP then it gets boosted to £20k automatically. I then co-ordinate selling £16k of equity from the ISA and buying £20k of the stock in the SIPP. In theory I could even transfer cash straight in to the SIPP and keep it as cash. I've not seen anything to say this would be naughty
I will later effectively pay 15% tax on what I take from the SIPP (25% tax free and 20% on the rest). So the £16k cash transferred in will then return £17k cash, less charges & spreads etc, so approx 6% return on shuffling the funds
Issues:
There will be limits on how much money a year I can add to the SIPP, but I only wish that might be a problem I can have
There will be limits on how quickly the cash can be taken from the SIPP before hitting the 40% threshold, so if I need lots of cash fast then I could be in trouble. I will be doing my level best to maintain a cash cushion to avoid that being an issue
Does this seem a plausible / worthwhile thing to be doing?
Ta
Bob
Context is :
I'm hoping to retire (early) in a few years time.
Once SP kicks in we should have enough db pension to be sure we can live reasonably well
I want to be very sure that we have sufficient cash to cover the gap between retirement and SPA, regardless of equity and stock markets
I'm already adding money to SIPP to avoid paying 40% tax but nowhere near hitting SIPP limits
Plan is:
In the run up to retirement look at "bed & SIPP". By which I mean sell equity in ISA and buy back in SIPP (with cash cushioning between the two).
After retirement start pulling money back from the SIPP, possibly to (re)invest in equity ISA, or just to replenish cash reserves
Rationale:
If I move an extra £16k cash in to the SIPP then it gets boosted to £20k automatically. I then co-ordinate selling £16k of equity from the ISA and buying £20k of the stock in the SIPP. In theory I could even transfer cash straight in to the SIPP and keep it as cash. I've not seen anything to say this would be naughty
I will later effectively pay 15% tax on what I take from the SIPP (25% tax free and 20% on the rest). So the £16k cash transferred in will then return £17k cash, less charges & spreads etc, so approx 6% return on shuffling the funds
Issues:
There will be limits on how much money a year I can add to the SIPP, but I only wish that might be a problem I can have
There will be limits on how quickly the cash can be taken from the SIPP before hitting the 40% threshold, so if I need lots of cash fast then I could be in trouble. I will be doing my level best to maintain a cash cushion to avoid that being an issue
Does this seem a plausible / worthwhile thing to be doing?
Ta
Bob