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25% tax free but leave 75% untouched and continue contributions?
Sara G
Posted: 14 July 2017 22:35:39(UTC)
#24

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Regarding recycling, personally I don't think it is worth the risk of falling foul of the rules. I'd be more inclined to withdraw the 25% tax free amount and transfer to an ISA over a period of time (depending on the size of the sum). That way at least you know you're increasing the amount of tax free income you will receive (assuming the ISA rules don't change),
2 users thanked Sara G for this post.
Tyrion Lannister on 14/07/2017(UTC), Jon Snow on 14/07/2017(UTC)
Lortag
Posted: 15 July 2017 07:40:42(UTC)
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My understanding of recycling, as a broad rule of thumb, is that even if you received a PCLS, if you are able to make a pension contribution without using the PCLS money then it is ok. If the only reason you are able to make a pension contribution , or part of a contribution, is the PCLS, or if you suddenly decide to increase your normal contributions because of the PCLS, then that is recycling.

If you google "pensions recycling rules uk" you will see articles by pruadviser and royallondon that describe the actual rules in detail. I think the above rule of thumb would work in most cases.

Interestingly, the actual rules seem to allow some recycling, if the PCLS is less than 7.5k or you increase contribution contributions by only a small amount. It's almost as if they are saying "help yourself to the buffet, but just don't take the p1ss - it'a one plate per person, ok!".

Personally, i wouldn't try to game the system by exploiting every nook and cranny of the rules. If you are judged to have recycled the penalties are serious. The entire PCLS would be taxed, even if you had only used a small part of it to recycle. That could be very expensive.
1 user thanked Lortag for this post.
Sara G on 15/07/2017(UTC)
Peter Sm
Posted: 14 October 2017 10:46:24(UTC)
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Catch The Pigeon;48889 wrote:
DJ61;48881 wrote:
Apologies I am still confused. I get that that these limits only apply once you start drawing down from the 75%, but I had always thought that taking the 25% tax free only at 55 with no further withdrawals reduced the allowance to £10k. So it's still £40k until you withdraw any of the 75%?


If you are still unsure, arrange a meeting with an IFA. The benefit of their advice, should outweigh the cost.

If you are in Kent / East Sussex, then I'd be happy to offer my services.


Hi Catch the pigeon, even though I live in Cambs area, I would like and pay for your IFA advice on SIPP and investment trusts and other investments within my SIPP. Plus happy to travel to you inKent. Please IM or contact. Not sure how we do this via this forum?
1 user thanked Peter Sm for this post.
Catch The Pigeon on 18/10/2017(UTC)
Peter Sm
Posted: 14 October 2017 19:37:18(UTC)
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Need to know how to make contact with Catch the Pigeon.
chubby bunny
Posted: 14 October 2017 22:08:11(UTC)
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I don't think there's any way to message someone privately on this message board. One of you is going to have to give the other their contact details and I don't know if you'd want to do that in a public post.
Peter Sm
Posted: 14 October 2017 22:13:31(UTC)
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peter640@icloud.com
Please get in touch.
Peter
Peter Sm
Posted: 14 October 2017 22:15:09(UTC)
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Catch The Pigeon;48840 wrote:
You can take your max tax free cash (25%), take no taxable income from the remaining 75% and continue to contribute £40,000 each year.

If you were to take a taxable income from the remaining 75%, you would trigger the Money Purchase Annual Allowance (MPAA) and be restricted to contributions of £10k/£4k (the law is currently unclear on this).

I'm an IFA by the way, so happy to answer straight forward questions.



Please reply
petersmith640@hotmail.com

Catch The Pigeon
Posted: 18 October 2017 08:28:56(UTC)
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Joined: 09/12/2015(UTC)
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Peter Sm;51963 wrote:
Catch The Pigeon;48889 wrote:
DJ61;48881 wrote:
Apologies I am still confused. I get that that these limits only apply once you start drawing down from the 75%, but I had always thought that taking the 25% tax free only at 55 with no further withdrawals reduced the allowance to £10k. So it's still £40k until you withdraw any of the 75%?


If you are still unsure, arrange a meeting with an IFA. The benefit of their advice, should outweigh the cost.

If you are in Kent / East Sussex, then I'd be happy to offer my services.


Hi Catch the pigeon, even though I live in Cambs area, I would like and pay for your IFA advice on SIPP and investment trusts and other investments within my SIPP. Plus happy to travel to you inKent. Please IM or contact. Not sure how we do this via this forum?


Sorry Peter, only just seen your posts. I've just sent an email to your hotmail address. Speak soon.

For reference, my e-mail address is ben@courtneyhavers.co.uk
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