HL SIPP - Drawdown

[RetiringMoose]

Hi, I have a few questions about my Hargreaves Lansdown SIPP and drawdown if anyone could help please.

Background
I have a SIPP with HL and also a DC pension pot with a former employer. For the moment I'd like to keep them separate for reasons relating to eggs in basket and costs. The LTA, if it gets reinstated, is not likely to be an issue and it's unlikely I will be returning to full time work.

Plan
I intend to take the 25% tax free cash from my HL SIPP and move the remainder into drawdown. Sometime after that I will start to take an income from the drawdown pension with the idea of staying under my annual tax allowance. Some years in the future I will probably transfer my DC pension pot from my former employer to a HL SIPP and repeat the process of taking 25% tax free cash and moving the remainder into drawdown. I will also be receiving (I hope) a full basic state pension, but that doesn't form part of these questions, though of course it will be a factor in how much tax I will be paying on my drawdown pension at that time.

Questions
1) Am I ok to repeat the process twice? I.e. SIPP -> 25% tax free cash and drawdown pension on my current HL SIPP and the same again if I transfer my former employer's DC pension pot to a HL SIPP at some time in the future? I.e. I don't have to do it all at once?

2) When I take the 25% tax free cash from my HL SIPP, do I actually need to do anything as for as HMRC is concerned? Is there a form I need to fill in to tell them it's my tax free cash? Is there any danger that they could be notified of the lump sum dropping into my bank account and then deciding it forms part of my taxable income for the year and I have to explain it's my 25% tax free cash so please leave me alone? Do I need to fill in a tax return in respect of the tax free cash or so anything else? I do have a government gateway account if that is relevant.

3) When I start to take an income from the drawdown pension pot with HL, the monthly amount will be my annual allowance divided by 12 (I will have no other taxable income as I'll also be using an ISA) so there should be no tax liability. However, I understand that HL will still deduct 20% tax from my monthly withdrawals and I will need to reclaim this from HMRC
i) Is there an online form I need to complete for this?
ii) Is this sent just before or after the end of the tax year in question?
iii) How long does HMRC tale to refund the tax paid?
iv) Do I need to provide HMRC with something from HL confirming details of the monthly withdrawals so they can confirm what tax has been paid and what is due back to me?

4) If anyone has taken the 25% tax free cash from a HL SIPP and moved into drawdown, is there anything you wish you'd known beforehand or are there any minor pitfalls to avoid or helpful bits of advice to smooth the process?

Thanks in advance.

[JohnB]

I battled with HL to start my SIPP drawdown in March. My problem was I turned 55 on the 17th of March, and the 17th is the last day of the month you can request a payment (they only pay out once a month, on the 28th). I was very keen for the payment to be in the 22-23 tax year and it was really hard contacting HL to get them to promise to work promptly. Each call handler/email reader had different views, and the back office team didn't understand that they could start a process when I was too young, provided the action occurred on the right day. The whole process, which required them to send you paper forms (nothing online!) and take 10 days to process on receipt, seemed very clumsy, and disillusioned me with the company. Also given my payment was 8 days from the end of the tax year, it still went through on a month-0 basis (they assume the payment is monthly, and 11 more will be taken in 7 days!!!) and I paid far too much tax.

It did go through, and AFAIK all the paperwork about withdrawal and lump sums was done correctly and passed to HMRC.

So my advice is to give yourself lots of time, and assume you won't get the cash until well after you turn 55.

[TUK020]

I took the 25% PCLS on turning 55 a few years ago.
From memory, starting to take money from the pension did require a form to be submitted in paper. Took a month or so, but was all straightforward.

At this point they crystalize a chunk of your pension and move this money into a 'Pension Drawdown' account. If you add further contributions, this goes into a second 'Pension' account. Both accounts are within the same log in. All very easy to manage stocks and shares in each.

Talking taxable benefits from the drawdown account can be done online, and it asks whether this is a once off or monthly payment, and treats it accordingly. They do need to have your correct tax details in advance for all of this to go smoothly - talk to them first to make sure this is in place.

I believe that moving a second chunk from Pension to Pension DD can be done online.

My trouble is that I have used up my LTA, and this won't allow me to access more PCLS until the legislation to remove LTA is done for the next tax year (currently they haven't, but have just set the excess LTA penalty to zero).

All straight forward but make sure they have your correct tax details in place

[RetiringMoose]

I battled with HL to start my SIPP drawdown in March. My problem was I turned 55 on the 17th of March, and the 17th is the last day of the month you can request a payment (they only pay out once a month, on the 28th). I was very keen for the payment to be in the 22-23 tax year and it was really hard contacting HL to get them to promise to work promptly. Each call handler/email reader had different views, and the back office team didn't understand that they could start a process when I was too young, provided the action occurred on the right day. The whole process, which required them to send you paper forms (nothing online!) and take 10 days to process on receipt, seemed very clumsy, and disillusioned me with the company. Also given my payment was 8 days from the end of the tax year, it still went through on a month-0 basis (they assume the payment is monthly, and 11 more will be taken in 7 days!!!) and I paid far too much tax.

It did go through, and AFAIK all the paperwork about withdrawal and lump sums was done correctly and passed to HMRC.

So my advice is to give yourself lots of time, and assume you won't get the cash until well after you turn 55.

Hi, thanks for the reply. Sounds like your experience was a bit of a pain. I'm over 55, but HL have told me that I still need to confirm my date of birth, so I'll see if I can get that sorted before I actually apply for drawdown. I don't have any particular time constraints or tax year constraints, so hopefully won't have the same pressure for them to sort things quickly. Regards

[RetiringMoose]

I took the 25% PCLS on turning 55 a few years ago.
From memory, starting to take money from the pension did require a form to be submitted in paper. Took a month or so, but was all straightforward.

At this point they crystalize a chunk of your pension and move this money into a 'Pension Drawdown' account. If you add further contributions, this goes into a second 'Pension' account. Both accounts are within the same log in. All very easy to manage stocks and shares in each.

Talking taxable benefits from the drawdown account can be done online, and it asks whether this is a once off or monthly payment, and treats it accordingly. They do need to have your correct tax details in advance for all of this to go smoothly - talk to them first to make sure this is in place.

I believe that moving a second chunk from Pension to Pension DD can be done online.

My trouble is that I have used up my LTA, and this won't allow me to access more PCLS until the legislation to remove LTA is done for the next tax year (currently they haven't, but have just set the excess LTA penalty to zero).

All straight forward but make sure they have your correct tax details in place

Hi, thanks for your reply. Glad it was relatively straightforward for you. When you say "They do need to have your correct tax details in advance", how did you actually provide these? Did HMRC send you something through the post and you send HL a copy or do HMRC notify HL directly after the first withdrawal. Just wondering what the actual process was. Hope they get the LTA issue sorted for you (must have been a nice surprise when it was recently abolished!) Regards

[TUK020]

I took the 25% PCLS on turning 55 a few years ago.
From memory, starting to take money from the pension did require a form to be submitted in paper. Took a month or so, but was all straightforward.

At this point they crystalize a chunk of your pension and move this money into a 'Pension Drawdown' account. If you add further contributions, this goes into a second 'Pension' account. Both accounts are within the same log in. All very easy to manage stocks and shares in each.

Talking taxable benefits from the drawdown account can be done online, and it asks whether this is a once off or monthly payment, and treats it accordingly. They do need to have your correct tax details in advance for all of this to go smoothly - talk to them first to make sure this is in place.

I believe that moving a second chunk from Pension to Pension DD can be done online.

My trouble is that I have used up my LTA, and this won't allow me to access more PCLS until the legislation to remove LTA is done for the next tax year (currently they haven't, but have just set the excess LTA penalty to zero).

All straight forward but make sure they have your correct tax details in place

Hi, thanks for your reply. Glad it was relatively straightforward for you. When you say "They do need to have your correct tax details in advance", how did you actually provide these? Did HMRC send you something through the post and you send HL a copy or do HMRC notify HL directly after the first withdrawal. Just wondering what the actual process was. Hope they get the LTA issue sorted for you (must have been a nice surprise when it was recently abolished!) Regards

Afraid I don't remember the mechanics - I think I had to supply my tax reference number as part of the initial paperwork. If they had abolished the LTA 18 months earlier, I might still be working, albeit part time