Am I missing something?

[Darka]

I can't access my SIPP until Sept 24, but am pondering a few things to make best use of it.

As I am retired and have no earned income, I know I can pay £2880 into my SIPP and get tax relief of £720 on it.
What is to stop me doubling up on this, by:

- Paying £2880 into my wife's SIPP (she still has unclaimed tax-free cash available), taking out the £3600 (cash in + tax relief) all tax-free.
- Then pay £2800 of that into my SIPP (again, having unclaimed tax-free cash available) and taking out the £3600 from my SIPP, again all tax-free.

So, for a single sum of £2880, my wife would get £720 tax relief and then so would I, doubling the tax relief to £1440.

If all the cash was taken from each pensions remaining tax-free lump sums, what's the catch?
I'm sure there is a catch and am of course aware that it will affect the size of remaining tax-free cash but what else am I missing?

[swill453]

You're not really missing anything, the 2 x £2880 can come from any source, so doing the process serially is fine. It does take a couple of months to get the tax relief though.

Don't forget if you have no other income you can drawdown the personal allowance of £12,570 from crystallised funds each year tax-free too.

Scott.

[Gersemi]

I'm doing this at the moment. I am in my third year of paying in £2880 to a SIPP (with nothing else in it), getting it grossed up to £3600 and then withdrawing the whole amount. 25% is tax free and tax is deducted on the rest, but as I have no taxable income (well apart from a little investment income from sources not yet squirreled into ISAs) I can reclaim this. Actually this year I have a normal tax code for it, so I have received 2 months personal allowances against it and I'm expecting to get the rest of the refund in the subsequent months (it's actually 2 years worth as I made last year's contribution in March and this year's in April and now I'm withdrawing both). When I get the money back most of it will go back to the savings account it came from (I'll spend the rest on day to day living expenses). My husband has made contribuitions to his SIPP as well - HMRC don't ask where the money came from, so there is nothing to stop you using the same money.

[SPURLEY]

Hello, can I just ask that, with putting this money into the SIPP are there charges from the platform service which will take away some of your benefit from this procedure , I think II charge a monthly fee for having a SIPP with them . I am just curious as I have not opened a SIPP as yet . Robert

[StepOne]

Hello, can I just ask that, with putting this money into the SIPP are there charges from the platform service which will take away some of your benefit from this procedure , I think II charge a monthly fee for having a SIPP with them . I am just curious as I have not opened a SIPP as yet . Robert

HI, yes, there will be SIPP charges, but I think the original poster already has a SIPP, so is already paying those charges. I use iWeb for my SIPP and the charge is a flat rate, £45 quarterly I think.

Cheers
StepOne

[Darka]

You're not really missing anything, the 2 x £2880 can come from any source, so doing the process serially is fine. It does take a couple of months to get the tax relief though.

Don't forget if you have no other income you can drawdown the personal allowance of £12,570 from crystallised funds each year tax-free too.

Scott.

Thanks Scott,

I was going to take some tax-free next September (for a new kitchen), then each year a UFPLS payment for the whole of my allowance (£16750).
This idea was then to put in the 2880 each subsequent year for a couple of years at least.

[Darka]

Hello, can I just ask that, with putting this money into the SIPP are there charges from the platform service which will take away some of your benefit from this procedure , I think II charge a monthly fee for having a SIPP with them . I am just curious as I have not opened a SIPP as yet . Robert

HI, yes, there will be SIPP charges, but I think the original poster already has a SIPP, so is already paying those charges. I use iWeb for my SIPP and the charge is a flat rate, £45 quarterly I think.

Cheers
StepOne

StepOne is correct, my SIPP is with YouInvest and I pay £10 per month which I consider very reasonable, there would not be any additional charges for what I'm proposing.

[Darka]

I'm doing this at the moment. I am in my third year of paying in £2880 to a SIPP (with nothing else in it), getting it grossed up to £3600 and then withdrawing the whole amount. 25% is tax free and tax is deducted on the rest, but as I have no taxable income (well apart from a little investment income from sources not yet squirreled into ISAs) I can reclaim this. Actually this year I have a normal tax code for it, so I have received 2 months personal allowances against it and I'm expecting to get the rest of the refund in the subsequent months (it's actually 2 years worth as I made last year's contribution in March and this year's in April and now I'm withdrawing both). When I get the money back most of it will go back to the savings account it came from (I'll spend the rest on day to day living expenses). My husband has made contribuitions to his SIPP as well - HMRC don't ask where the money came from, so there is nothing to stop you using the same money.

Thanks Gersemi,

This helps as I think it would be worth it, for a couple of years anyway - would probably stop once my wife's State Pension comes online later.

[kempiejon]

Monevator regularly update a table fo broker charges
https://monevator.com/compare-uk-cheape ... e-brokers/
HL charge me £200 annually, I recently considered another supplier and see AJBell is £120pa.

[SPURLEY]

Thank you for replying to my question . Robert

[stevem01]

I think some of the previous answers given regarding charges for SIPP accounts are actually incorrect.

Some brokers, for example both AJBell and Hargreaves Lansdown, make no charges at all on cash held in a SIPP account. If there are no investments (i.e. investment trusts, ETFs, gilts, bonds, unit trusts, OEICs or structured products) they make no custody charges and they also don't levy inactivity charges.

Both AJBell and Hargreaves Lansdown also pay a reasonable amonut of interest on the cash balance in a SIPP account - although the interest rate is less than can be obtained on cash placed in a savings account outside a SIPP.

[Gersemi]

I think some of the previous answers given regarding charges for SIPP accounts are actually incorrect.

Some brokers, for example both AJBell and Hargreaves Lansdown, make no charges at all on cash held in a SIPP account. If there are no investments (i.e. investment trusts, ETFs, gilts, bonds, unit trusts, OEICs or structured products) they make no custody charges and they also don't levy inactivity charges.

Both AJBell and Hargreaves Lansdown also pay a reasonable amonut of interest on the cash balance in a SIPP account - although the interest rate is less than can be obtained on cash placed in a savings account outside a SIPP.

Indeed - my SIPP is held through a financial adviser (yes slapped wrist for me) but I managed to withdraw more cash than I paid in despite paying some charges because the interest paid exceeded them.

[Dicky99]

I'm about to do this. I'm late to the party though because during the last two years while I've not been earning anything I wasn't aware of being able to do this.
My question is once a withdrawal is made and some reclaimable tax is taken, is it necessary to wait until the end of the tax year to get it back or is it possible to claim the tax back during the tax year?

[Gersemi]

I'm about to do this. I'm late to the party though because during the last two years while I've not been earning anything I wasn't aware of being able to do this.
My question is once a withdrawal is made and some reclaimable tax is taken, is it necessary to wait until the end of the tax year to get it back or is it possible to claim the tax back during the tax year?

No, you don't have to wait until the end of the tax year, you can complete form P50Z in the case of a full withdrawal (or form P55 for a part withdrawal). In my case, where I am in the second year of making a withdrawal, a cumulative code has been used, so I expect refunds of tax to be made by the pension payer in the next few months until it has all been repaid.