SIPP & Pension guidance - IM Private Clients
Discussion
JulianPH said:
Have you also considered your annual interest allowance for the cash at bank (£1,000 a year for basic rate tax payers, £500 a year for higher rate)? This is in addition to your personal income tax allowance.
A pension contribution and this allowance should give you all the leeway you are looking for. A charitable donation would look after anything else.
Thank you, Nik and Julian, for the advice so far. The SIPP is on its way.A pension contribution and this allowance should give you all the leeway you are looking for. A charitable donation would look after anything else.
Could you expand, please, on the "charitable donation" remark? I can find plenty of references to higher rate tax payers being able to claim relief under Gift Aid, but nothing to help the deserving poor, like me. It's still touch and go, not helped by HMRC and my former employer's pension scheme offering a range of estimates for my 2023/2024 pension income.
IJWS15 said:
Not sure if this has been answered, I know there are some restrictions on what I can contribute into a private pension if I start drawing down but are there any restrictions on employer contributions?
Hi IJWS15 Edited by IJWS15 on Friday 22 March 09:49
If you have drawn income, i.e. a taxable payment, from a defined contribution pension then MPPA applies which limits contributions to £10k p.a. gross
Cheers
Nik
A friend has just been informed that they are the beneficiary of £120,000 death in benefit. They are in a minimum wage job, so earn approx £16,000 pa.
It is only available as a one-off lump sum.
It looks like the payment will be treated as taxable for income tax. Does this mean that it counts as income? Is there any way to avoid any tax?
I think that they can put all their income (approx £3000 net) into a pension. If they do, will they be able to claim 40%, or will it just be the normal 20%.
I expect there are lots of questions to follow.
[edit] I'm now reading that the lump sum is tax-free. Why do these things always land on my lap at a time when all those who can help are unavailable?
It is only available as a one-off lump sum.
It looks like the payment will be treated as taxable for income tax. Does this mean that it counts as income? Is there any way to avoid any tax?
I think that they can put all their income (approx £3000 net) into a pension. If they do, will they be able to claim 40%, or will it just be the normal 20%.
I expect there are lots of questions to follow.
[edit] I'm now reading that the lump sum is tax-free. Why do these things always land on my lap at a time when all those who can help are unavailable?
Edited by pingu393 on Saturday 18th May 16:53
pingu393 said:
A friend has just been informed that they are the beneficiary of £120,000 death in benefit. They are in a minimum wage job, so earn approx £16,000 pa.
It is only available as a one-off lump sum.
It looks like the payment will be treated as taxable for income tax. Does this mean that it counts as income? Is there any way to avoid any tax?
I think that they can put all their income (approx £3000 net) into a pension. If they do, will they be able to claim 40%, or will it just be the normal 20%.
I expect there are lots of questions to follow.
[edit] I'm now reading that the lump sum is tax-free. Why do these things always land on my lap at a time when all those who can help are unavailable?
Hi Pingu, as you are probably gathering it can be quite complicated and depends on different factors, the age of the person who died and passed on the benefits being key (under or over 75 years).It is only available as a one-off lump sum.
It looks like the payment will be treated as taxable for income tax. Does this mean that it counts as income? Is there any way to avoid any tax?
I think that they can put all their income (approx £3000 net) into a pension. If they do, will they be able to claim 40%, or will it just be the normal 20%.
I expect there are lots of questions to follow.
[edit] I'm now reading that the lump sum is tax-free. Why do these things always land on my lap at a time when all those who can help are unavailable?
Edited by pingu393 on Saturday 18th May 16:53
You may have it sorted now, but feel free to PM me if you would like me to take a look.
Cheers
Julian
JulianPH said:
Hi Pingu, as you are probably gathering it can be quite complicated and depends on different factors, the age of the person who died and passed on the benefits being key (under or over 75 years).
You may have it sorted now, but feel free to PM me if you would like me to take a look.
Cheers
Julian
Thanks, the deceased was under 75 when they died.You may have it sorted now, but feel free to PM me if you would like me to take a look.
Cheers
Julian
I'll probably send a PM after we have had a chat with the administrators.
pingu393 said:
A friend has just been informed that they are the beneficiary of £120,000 death in benefit. They are in a minimum wage job, so earn approx £16,000 pa.
It is only available as a one-off lump sum.
It looks like the payment will be treated as taxable for income tax. Does this mean that it counts as income? Is there any way to avoid any tax?
I think that they can put all their income (approx £3000 net) into a pension. If they do, will they be able to claim 40%, or will it just be the normal 20%.
I expect there are lots of questions to follow.
[edit] I'm now reading that the lump sum is tax-free. Why do these things always land on my lap at a time when all those who can help are unavailable?
I’ve recently been through this. It was tax free but subject to the life time allowance, this was before the new tax year. ( I assume things might have been different if they were over 75)It is only available as a one-off lump sum.
It looks like the payment will be treated as taxable for income tax. Does this mean that it counts as income? Is there any way to avoid any tax?
I think that they can put all their income (approx £3000 net) into a pension. If they do, will they be able to claim 40%, or will it just be the normal 20%.
I expect there are lots of questions to follow.
[edit] I'm now reading that the lump sum is tax-free. Why do these things always land on my lap at a time when all those who can help are unavailable?
Edited by pingu393 on Saturday 18th May 16:53
I thought I'd asked in here rather than start a new thread.
There is a plot becoming available that is currently commercial use.
It will be vacant possession on completion.
It appears that pension rules state that it must be income producing with a formal lease in place - does this mean that it must be in place in day one or can there be a gap whilst one is put in place?
My pension would have sufficient cash to purchase without the need for a mortgage
Can anyone here clarify?
Thanks in advance.
There is a plot becoming available that is currently commercial use.
It will be vacant possession on completion.
It appears that pension rules state that it must be income producing with a formal lease in place - does this mean that it must be in place in day one or can there be a gap whilst one is put in place?
My pension would have sufficient cash to purchase without the need for a mortgage
Can anyone here clarify?
Thanks in advance.
TownIdiot said:
I thought I'd asked in here rather than start a new thread.
There is a plot becoming available that is currently commercial use.
It will be vacant possession on completion.
It appears that pension rules state that it must be income producing with a formal lease in place - does this mean that it must be in place in day one or can there be a gap whilst one is put in place?
My pension would have sufficient cash to purchase without the need for a mortgage
Can anyone here clarify?
Thanks in advance.
Hi TownIdiot There is a plot becoming available that is currently commercial use.
It will be vacant possession on completion.
It appears that pension rules state that it must be income producing with a formal lease in place - does this mean that it must be in place in day one or can there be a gap whilst one is put in place?
My pension would have sufficient cash to purchase without the need for a mortgage
Can anyone here clarify?
Thanks in advance.
The ultimate test for qualification of property to be held in a SIPP is that the property is commercial property and this is the test that needs to be satisfied.
Different SIPP providers may take a different view of what is needed to satisfy the criteria but ultimately it is HMRC that has the last say.
In situations of doubt it is often best provide as much information as possible and then to ask the SIPP provider to check with HMRC that it meets criteria
Cheers
Good evening. Been working overseas for a company. Will be back on payroll of UK part of company payroll for circa 6 months from the end of the summer then that’s likely it with this company.
Looking to maximise value of any ‘please leave us alone’ money if this comes to fruition…., perhaps via establishing a (post-company pension scheme) SIPP or similar as I won’t need the money immediately . I know I need some specific advise to crunch the numbers with this and other things like tax free lump sums etc (noting anyway that there is an overseas part of pension so I’m only allowed some tax free on contributions paid into up to 2017).. but I’m not sure what the form is here? If IM or anyone sensible is allowed by PH to offer any tips on finding a decent pensions /tax IFA please do….
More generally though, is a new SIPP likely to be a possible useful option for a maximising value of a redundancy money one off? … I can’t top up the company one as any payment will be paid after last day on payroll. I anticipate having 3 years of unused UK pension allowance as my UK Co. pension was simply left open and not used while I worked away. I’ll dump my ‘gardening leave’ few months salary in there up to max allowed 75% of monthly gross but there will be space enough in the allowance for any last company £ hurrah.
All steers welcome. Will all be within this financial year so need get a grip of myself and sort this without unnecessary drama.
Thanks
Looking to maximise value of any ‘please leave us alone’ money if this comes to fruition…., perhaps via establishing a (post-company pension scheme) SIPP or similar as I won’t need the money immediately . I know I need some specific advise to crunch the numbers with this and other things like tax free lump sums etc (noting anyway that there is an overseas part of pension so I’m only allowed some tax free on contributions paid into up to 2017).. but I’m not sure what the form is here? If IM or anyone sensible is allowed by PH to offer any tips on finding a decent pensions /tax IFA please do….
More generally though, is a new SIPP likely to be a possible useful option for a maximising value of a redundancy money one off? … I can’t top up the company one as any payment will be paid after last day on payroll. I anticipate having 3 years of unused UK pension allowance as my UK Co. pension was simply left open and not used while I worked away. I’ll dump my ‘gardening leave’ few months salary in there up to max allowed 75% of monthly gross but there will be space enough in the allowance for any last company £ hurrah.
All steers welcome. Will all be within this financial year so need get a grip of myself and sort this without unnecessary drama.
Thanks
i4got said:
Once you have mad a UFPLS withdrawal from a SIPP (25% being tax free) does that prevent you taking 25% tax free of the remaining amount still invested (ie as in regular drawdown)?
Or are you limited to continuing with UFPLS withdrawals?
Thanks.
In theory, I think you could do what you ask….but I suspect it will boil down to the individual scheme: ask your provider.Or are you limited to continuing with UFPLS withdrawals?
Thanks.
Apologies if this has already been asked and answered, but I'm struggling with how to compare fund performance?
My current employer only has a tiny number of UK employees so have gone down the NEST route as a default simple fund provider.
The biggest issue I have with this is that it provides basically no investment choice! I seem to be limited to an annual general fund or a Sharia investment fund. I've gone for the latter because it has seems to have returned 2-3x the growth of the general fund over every standard time measurement out to 5 years - which prompts a secondary question of why anyone leaves their pension in the general fund? - but I suspect I'd still be better off transferring everything out of my NEST pension into one of my other funds every few months.
What I'm struggling with is how to track and compare fund performance?
It's easy with all my other funds I'm no longer paying into as I can just add their monthly values into a spreadsheet, index them and do a variety of calculations and graphs, but how do I add the NEST fund into this picture when especially at the moment in the first few months/years of paying into it the value of my monthly payments massively distorts the total?
My current employer only has a tiny number of UK employees so have gone down the NEST route as a default simple fund provider.
The biggest issue I have with this is that it provides basically no investment choice! I seem to be limited to an annual general fund or a Sharia investment fund. I've gone for the latter because it has seems to have returned 2-3x the growth of the general fund over every standard time measurement out to 5 years - which prompts a secondary question of why anyone leaves their pension in the general fund? - but I suspect I'd still be better off transferring everything out of my NEST pension into one of my other funds every few months.
What I'm struggling with is how to track and compare fund performance?
It's easy with all my other funds I'm no longer paying into as I can just add their monthly values into a spreadsheet, index them and do a variety of calculations and graphs, but how do I add the NEST fund into this picture when especially at the moment in the first few months/years of paying into it the value of my monthly payments massively distorts the total?
i4got said:
Once you have mad a UFPLS withdrawal from a SIPP (25% being tax free) does that prevent you taking 25% tax free of the remaining amount still invested (ie as in regular drawdown)?
Or are you limited to continuing with UFPLS withdrawals?
Thanks.
HiOr are you limited to continuing with UFPLS withdrawals?
Thanks.
It depends on how the scheme provider have treated the payment. Most will have only crystallised the UFPLS amount so the remaining fund remains uncrystalsied and so you should still have full drawdown options available to you
Cheers
Nik
weeve said:
Good evening. Been working overseas for a company. Will be back on payroll of UK part of company payroll for circa 6 months from the end of the summer then that’s likely it with this company.
Looking to maximise value of any ‘please leave us alone’ money if this comes to fruition…., perhaps via establishing a (post-company pension scheme) SIPP or similar as I won’t need the money immediately . I know I need some specific advise to crunch the numbers with this and other things like tax free lump sums etc (noting anyway that there is an overseas part of pension so I’m only allowed some tax free on contributions paid into up to 2017).. but I’m not sure what the form is here? If IM or anyone sensible is allowed by PH to offer any tips on finding a decent pensions /tax IFA please do….
More generally though, is a new SIPP likely to be a possible useful option for a maximising value of a redundancy money one off? … I can’t top up the company one as any payment will be paid after last day on payroll. I anticipate having 3 years of unused UK pension allowance as my UK Co. pension was simply left open and not used while I worked away. I’ll dump my ‘gardening leave’ few months salary in there up to max allowed 75% of monthly gross but there will be space enough in the allowance for any last company £ hurrah.
All steers welcome. Will all be within this financial year so need get a grip of myself and sort this without unnecessary drama.
Thanks
Hi Looking to maximise value of any ‘please leave us alone’ money if this comes to fruition…., perhaps via establishing a (post-company pension scheme) SIPP or similar as I won’t need the money immediately . I know I need some specific advise to crunch the numbers with this and other things like tax free lump sums etc (noting anyway that there is an overseas part of pension so I’m only allowed some tax free on contributions paid into up to 2017).. but I’m not sure what the form is here? If IM or anyone sensible is allowed by PH to offer any tips on finding a decent pensions /tax IFA please do….
More generally though, is a new SIPP likely to be a possible useful option for a maximising value of a redundancy money one off? … I can’t top up the company one as any payment will be paid after last day on payroll. I anticipate having 3 years of unused UK pension allowance as my UK Co. pension was simply left open and not used while I worked away. I’ll dump my ‘gardening leave’ few months salary in there up to max allowed 75% of monthly gross but there will be space enough in the allowance for any last company £ hurrah.
All steers welcome. Will all be within this financial year so need get a grip of myself and sort this without unnecessary drama.
Thanks
Any redundancy pay would count as relevant income for a pension contribution, so assuming you have enough carry forward from previous years you could make a pension contribution and gain tax relief on up to 100% of your earnings in the tax year of contribution.
Cheers
Nik
Gassing Station | Finance | Top of Page | What's New | My Stuff