SIPP & Pension guidance - IM Private Clients

[pingu393]

AdamIM said:

Representatives have to take all reasonable steps to locate beneficiaries in such cases. This can include advertising, instructing geneoalogists etc. What is reasonable will depend on the facts of the case.

Just as we thought - until they run out of money / bleed the estate dry.

[mikeiow]

pingu393 said:

AdamIM said:

Representatives have to take all reasonable steps to locate beneficiaries in such cases. This can include advertising, instructing geneoalogists etc. What is reasonable will depend on the facts of the case.

Just as we thought - until they run out of money / bleed the estate dry.

That would, to me, sound eminently unreasonable, & could warrant a discussion about their plan: it should certainly not be to leave the known beneficiaries with fk all….I would be mighty surprised if an ombudsman would disagree with me here…..

[Consigliere]

Hi IM Team,

My current pension provider is asking if IM uses 'Origo Options' to do a pension transfer from them to you.

Thanks

[AdamIM]

Consigliere said:

Hi IM Team,

My current pension provider is asking if IM uses 'Origo Options' to do a pension transfer from them to you.

Thanks

Hi Consigliere,

Yes, we do use Origo

Regards

Adam

[Consigliere]

AdamIM said:

Hi Consigliere,

Yes, we do use Origo

Regards

Adam

Great - should I email you or Nik?

[AdamIM]

Consigliere said:

AdamIM said:

Hi Consigliere,

Yes, we do use Origo

Regards

Adam

Great - should I email you or Nik?

If you could use the [e-mail] and cc Nik, please

Steve Cooper (Coops) should be able to pick it up. Steve deals with transfers

Regards

Adam

[ferrisbueller]

I'd like to set up a SIPP to use up my pension allowance.

Please can someone explain to me like I'm a five year old how to calculate how much I can put into the SIPP this tax year and how to calculate the three year's back dated allowance I could claim, too? I'm getting myself in a muddle with all the calcs and it looks easy to make a mistake. Thanks

[LemonTart]

I guess no one really knows but your opinions or guesses if you would please.

How might labour reintroduce the LTA if they win the next election?

I guess to make this happen they just announce it in the budget but how long would it take to be implemented? I ask because if they did that I think I would just start drawdown maybe the whole of the tax free lump sum so I am under the old LTA figure.

Assuming ISA is full or stays limited to £20k / year where would you invest the rest of the tax free lump sum without getting whacked for tax on interest or capital gain? It wouldn’t get me a F40 :-(.

I had intended to work two more years to 57.5 years old, not take a tax free lump sum so live off a mix of drawdown and savings, say the current free pay plus 25% & then topping up from other savings so not even having a educated guess really doesn’t help me.

Thanks in anticipation..

[Happy Jim]

ferrisbueller said:

I'd like to set up a SIPP to use up my pension allowance.

Please can someone explain to me like I'm a five year old how to calculate how much I can put into the SIPP this tax year and how to calculate the three year's back dated allowance I could claim, too? I'm getting myself in a muddle with all the calcs and it looks easy to make a mistake. Thanks

Assuming you’ve put zero into a pension somewhere else then this is what I’ve just done:

Open a SIPP with Hargreaves Lansdown* (online, NI number needed), dump £48k of my hard earned into it, HL claim the lower rate of tax (an additional 25%) from HMRC and will add it to my SIPP in about 2 months (20% of £60k, so I get a “free” £12k added to my SIPP). Early next year I submit my self assessment and get the other 20% of £60k tax paid out to me.

Result is a £60k SIPP at a cost of £36k to me (£48k to SIPP, £12k HMRC to SIP, £12k cash back from self assessment).

Happy daze!

Jim

• other SIPP providers are available!

Edited by Happy Jim on Thursday 1st February 22:57

[alscar]

LemonTart said:

I guess no one really knows but your opinions or guesses if you would please.

How might labour reintroduce the LTA if they win the next election?

I guess to make this happen they just announce it in the budget but how long would it take to be implemented? I ask because if they did that I think I would just start drawdown maybe the whole of the tax free lump sum so I am under the old LTA figure.

Assuming ISA is full or stays limited to £20k / year where would you invest the rest of the tax free lump sum without getting whacked for tax on interest or capital gain? It wouldn’t get me a F40 :-(.

I had intended to work two more years to 57.5 years old, not take a tax free lump sum so live off a mix of drawdown and savings, say the current free pay plus 25% & then topping up from other savings so not even having a educated guess really doesn’t help me.

Thanks in anticipation..

Purely guessing but I would say “ quickly “ would be the short answer.
I imagine there would be a cut off date but maybe not ie Budget in March and effective date of then April 25 or even back dated - can they do that though ?
Either way I’m not sure they can necessarily just reinstate the applicable limits without considering Doctors and the like so who knows they might try and introduce different tiers.
This would all take time to work through so maybe quickly isn’t the answer.
Whatever the case I imagine FA’s have been working up ideas of how to mitigate any such change.
When I mentioned to mine a couple of weeks ago his thoughts were no need to do anything just yet but crystallising the tax free amount in one go was probably the start of one way to consider.

[SunsetZed]

alscar said:

LemonTart said:

I guess no one really knows but your opinions or guesses if you would please.

How might labour reintroduce the LTA if they win the next election?

I guess to make this happen they just announce it in the budget but how long would it take to be implemented? I ask because if they did that I think I would just start drawdown maybe the whole of the tax free lump sum so I am under the old LTA figure.

Assuming ISA is full or stays limited to £20k / year where would you invest the rest of the tax free lump sum without getting whacked for tax on interest or capital gain? It wouldn’t get me a F40 :-(.

I had intended to work two more years to 57.5 years old, not take a tax free lump sum so live off a mix of drawdown and savings, say the current free pay plus 25% & then topping up from other savings so not even having a educated guess really doesn’t help me.

Thanks in anticipation..

Purely guessing but I would say “ quickly “ would be the short answer.
I imagine there would be a cut off date but maybe not ie Budget in March and effective date of then April 25 or even back dated - can they do that though ?
Either way I’m not sure they can necessarily just reinstate the applicable limits without considering Doctors and the like so who knows they might try and introduce different tiers.
This would all take time to work through so maybe quickly isn’t the answer.
Whatever the case I imagine FA’s have been working up ideas of how to mitigate any such change.
When I mentioned to mine a couple of weeks ago his thoughts were no need to do anything just yet but crystallising the tax free amount in one go was probably the start of one way to consider.

If they're sensible they'll take the (IMHO) correct and easier approach and not reintroduce an LTA but instead reduce the annual contribution amount which a) appeals to their target voters b) doesn't punish good investments and c) avoids the hassle of all the issues associated with having an LTA in the first place, the doctor issue and the political wrangling of it in the future not to mention basic things like updating it based on inflation

Edited by SunsetZed on Friday 2nd February 16:06

[alscar]

SunsetZed said:

If they're sensible they'll take the (IMHO) correct and easier approach and not reintroduce an LTA but instead reduce the annual contribution amount which a) appeals to their target voters b) doesn't punish good investments and c) avoids the hassle of all the issues associated with having an LTA in the first place plus the political wrangling of it in the future not to mention basic things like updating it based on inflation

Your first three words might be the flaw but otherwise I much prefer your thoughts to mine especially as I no longer contribute to my Pensions !

[SunsetZed]

alscar said:

SunsetZed said:

If they're sensible they'll take the (IMHO) correct and easier approach and not reintroduce an LTA but instead reduce the annual contribution amount which a) appeals to their target voters b) doesn't punish good investments and c) avoids the hassle of all the issues associated with having an LTA in the first place the doctor issue and the political wrangling of it in the future not to mention basic things like updating it based on inflation

Your first three words might be the flaw but otherwise I much prefer your thoughts to mine especially as I no longer contribute to my Pensions !

Oh completely agree it might be optimistic but Starmer does seem more sensible than some leaders of the past (of all parties!) so I can but hope.

[Intelligent Money]

ferrisbueller said:

I'd like to set up a SIPP to use up my pension allowance.

Please can someone explain to me like I'm a five year old how to calculate how much I can put into the SIPP this tax year and how to calculate the three year's back dated allowance I could claim, too? I'm getting myself in a muddle with all the calcs and it looks easy to make a mistake. Thanks

Hi Ferrisbueller

For this year you can pay a gross contribution of £60,000. or 100% of your taxable earnings whichever is the lower.

If you are making a personal contribution you will receive tax relief of 20% on this contributions at source, so that relief is added to your pension contribution.

Assuming earnings over £60k, you would pay net £48,000, £12,000 of tax relief will be added so that makes the contribution up to £60,000

If you are a higher rate tax payer then additional tax relief can be claimed via self assessment.

Once you have made the maximum contribution for this year you can go back 3 years and top up previous years if you didn't maximise your contribution in that year.

This is subject to the fact that could have contributed to a pension in that tax year so you would need to have a scheme available to you in that year.

So first go back to tax year 20/21The maximum gross contribution for that year was £40k. Take any contribution away that you made in that year and you are left with amount you can top up

So if you made pension contributions of £10k gross in 20/21 you take the £10k from the £40k max and have £30k gross that you can "carry forward" and contribute in this tax year 23/24

You then do the same for tax year 21/22 and 22/23

You should also note that you will only receive tax relief on contributions up to 100% of your taxable earnings in the year of contribution.

So if with all your carry forward you could make a contribution of £100k in tax year 23/24 but your earnings were £80k you will only get tax relief on a contribution of £80k

Hope that helps, drop me a message at [e-mail] if you want any help with your numbers.

Nik

[ferrisbueller]

Intelligent Money said:

ferrisbueller said:

I'd like to set up a SIPP to use up my pension allowance.

Please can someone explain to me like I'm a five year old how to calculate how much I can put into the SIPP this tax year and how to calculate the three year's back dated allowance I could claim, too? I'm getting myself in a muddle with all the calcs and it looks easy to make a mistake. Thanks

Hi Ferrisbueller

For this year you can pay a gross contribution of £60,000. or 100% of your taxable earnings whichever is the lower.

If you are making a personal contribution you will receive tax relief of 20% on this contributions at source, so that relief is added to your pension contribution.

Assuming earnings over £60k, you would pay net £48,000, £12,000 of tax relief will be added so that makes the contribution up to £60,000

If you are a higher rate tax payer then additional tax relief can be claimed via self assessment.

Once you have made the maximum contribution for this year you can go back 3 years and top up previous years if you didn't maximise your contribution in that year.

This is subject to the fact that could have contributed to a pension in that tax year so you would need to have a scheme available to you in that year.

So first go back to tax year 20/21The maximum gross contribution for that year was £40k. Take any contribution away that you made in that year and you are left with amount you can top up

So if you made pension contributions of £10k gross in 20/21 you take the £10k from the £40k max and have £30k gross that you can "carry forward" and contribute in this tax year 23/24

You then do the same for tax year 21/22 and 22/23

You should also note that you will only receive tax relief on contributions up to 100% of your taxable earnings in the year of contribution.

So if with all your carry forward you could make a contribution of £100k in tax year 23/24 but your earnings were £80k you will only get tax relief on a contribution of £80k

Hope that helps, drop me a message at [e-mail] if you want any help with your numbers.

Nik

Thanks Nik. That's very helpful. I definitely need to open a SIPP!

[Timer]

I also have a question regarding starting a SIPP or SSAS pension

I am Company director and have taken the annual 12k tax free allowance as salary and rest in dividends. If I were to open a SIPP/SSAS can I carry forward unused pension allowance from previous 3(?) years ie £36k ish and would there be tax relief to top it up further even though no tax was paid on the income originally?

Hope that makes sense!

[JulianPH]

Timer said:

I also have a question regarding starting a SIPP or SSAS pension

I am Company director and have taken the annual 12k tax free allowance as salary and rest in dividends. If I were to open a SIPP/SSAS can I carry forward unused pension allowance from previous 3(?) years ie £36k ish and would there be tax relief to top it up further even though no tax was paid on the income originally?

Hope that makes sense!

Hi Timer

You must have sufficient net relevant earnings (which do not include dividends) in the current tax year to support any unused tax relief from previous years.

If your net relevant earnings for this tax year are £12k then this is your maximum pension contribution (on which you can obtain income tax relief), regardless of carrying forward previous tax years.

As a company director you still have options to achieve what you are looking for though, the most straight forward of which are;

1. You pay yourself an amount equal to the pension contribution you wish to make using carry forward and you get all the basic rate income tax back upon making the contribution, with any higher rate tax coming back later.

2. Your company makes the gross pension contribution for you directly, This has the added benefit of saving NI payments, as well as all income tax.

I hope this help, just shout if it raises any more questions.

[Timer]

Perfect. Thanks for clarifying, that makes sense!

[GT03ROB]

Couple of questions if I may:

• I have 2 pensions. 1 contains the my pension from previous employment, the other from my current employment. If I were to draw the 25% TFLS does this have to be from each pot or can I take from just 1? For clarity pot 1 is through the LTA so I would not be able to take the full 25% but be limited to the 268k

• Does drawing the TFLS prior to entering drawdown & whilst still working have any implications for my pensions or can they continue as they are now including receiving additional contributions.

[Car bon]

You can take the 25% TFLS from a single pension. When you take it, you have to declare any TFLS you have already taken from other sources.

TFLS has no impact on future contributions, but drawing down does. In some schemes the 2 events are linked, usually DB, in DC they are not, unless linked to a DB scheme.
MPAA is the limit on future contributions and it drops to £10k when you start drawing down taxed cash - https://www.gov.uk/guidance/work-out-your-allowanc...