This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

SIPP over LTA - tax efficient crystallisation

pilotprof
Posts:3
Joined:Tue Jan 31, 2017 4:28 pm
SIPP over LTA - tax efficient crystallisation

Postby pilotprof » Tue Jan 31, 2017 5:08 pm

I receive a final salary pension and I have £150k left below my lifetime limit of £1.5M (IP 2014).
I have also got a SIPP of £300k which I am interested in emptying in a tax-efficient way (all
figures are approximate).

I am thinking of:

1. crystallising £50k in this tax year and in the next 2 tax years in order to keep taxable income
below £100k p.a. in each year, assuming that £12.5k would be tax free and the rest taxable at the
higher rate.

2. Having used up the lifetime allowance in 2018-19, then taking out the rest (£150k +) as a lump
sum and paying 55% tax - the lump sum being used to help with a house purchase.

My reading of the rules is that I could not use the total SIPP (£300k) to calculate my tax free
cash (£75k). Is this the case?

Do steps 1 & 2 above seem sensible? or are there other tax-efficient ways of emptying the SIPP?

Return to “Savings & Investments, Pensions & Retirement”