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Understanding the 25% SIPP tax free process
Michael Grimes
Posted: 04 January 2018 12:07:03(UTC)

Joined: 14/07/2015(UTC)
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Thank you

Quite understand about the template and I will take a look at your link thread thanks.

I have not taken any money out of my SIPP so the £35k would be my first move into drawdown. It appealed to me as I wanted to avoid selling any investments if possible and just move either £105k (or £140k ?) investments into a crystallised element
Money Spider
Posted: 04 January 2018 22:57:27(UTC)

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@Michael Grimes

From what you have now said (£140k uncrystallised SIPP of which £35k is in cash), you could crystallise the whole amount (£140k) of your SIPP taking 25% (£35k) tax-free in the process.
The remaining 75% (£105k) will be in your crystallised Drawdown fund from which you can take money whenever you choose (subject to your marginal rate of income tax).

Just be careful of drawing down too much too soon and thereby quickly diminishing your fund.

Hopefully this answers your question.
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Michael Grimes on 05/01/2018(UTC)
Money Spider
Posted: 04 January 2018 23:05:03(UTC)

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@Michael Grimes

My spreadsheet is described in post No 55 of the thread I gave earlier, but post No 52 is probably worth reading too.

Good luck/good spreadsheeting ;-)

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Michael Grimes on 05/01/2018(UTC)
Posted: 05 January 2018 11:13:14(UTC)

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Money Spider;54958 wrote:
@Michael Grimes

Equally importantly, I think that the process of creating such a spreadsheet is invaluable in creating an understanding of how this process works. I have said "creating an understanding", rather than "understanding" on purpose.

I would echo this advice. Commenting further, but restricting the context to pensions rather than investments in general. Pensions are complicated and understanding the dynamics and complexities does not come as a one-off flash of understanding. In my experience you chip away at it, one question at a time until eventually you have accrued a workable knowledge. And even then there are aspects that crop up that you are unsure about. My 'dumb question' earlier being a case in point.

Creating a spreadsheet model identifies these gaps and obliges you to resolve them. Over time and from the 'bottom up'. And that is where forums such as this are so valuable, -they provide information 'on demand', ie as the issues occur to you.

While they are marketed on the basis of being convenient solutions and doing the grunt work there are drawbacks from taking something off the shelf and trying to make it work for you. It is unlikely to address all of your specific purposes. You will not gain an understanding of what happens between inputting your (personal to you) info and the outputs generated. And that means you are unlikely to fully understand the implications of those outputs.

There is of course an alternative approach. For the time poor, well found individual, and that is to outsource and put everything on the desk of the pensions advisor, accept that it's going to cost and trust and follow their advice. I suspect the majority of us who contribute to and frequent this forum prefer to be rather more hands on. And, I would argue, integral with being hands on is becoming familiar with the basics of Excel (or similar). You don't need to be an expert, or anywhere near to being an expert. The spreadsheet I have created uses perhaps 1-2% of Excel's potential. It's really quite basic but it does what I want. And when things change, -circumstances, or my understanding then I review and make changes until it again gives me what I want and need. Which is information I can trust and on the basis of which I can make decisions.

And in a strange, nerdy way, it's rather fun!


PS, a word of advice, -use the comments facility to record your key assumptions. Saves not being able to answer the 'Now why did I do that?' question when attempting to amend something you did 3 years ago....

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Tim D on 05/01/2018(UTC), Money Spider on 05/01/2018(UTC), Michael Grimes on 05/01/2018(UTC)
Posted: 05 January 2018 11:25:17(UTC)

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I am certainly not dismissive of the value of experts - in this case investment professionals.
But, having paid several hundreds of pounds for advice, I found that it is necessary to have done a lot of homework in order to be able to know what questions to ask, let alone what the advice means and whether it is applicable in a particular case.

So forums like this serve the very useful purpose of making consumers more knowledgeable and better able to understand an unreasonably arcane process and the advice of pensions professionals about how to negotiate it.

As it happens, it was by my own diligence that I discovered an option that no-one (expert, employer or pension scheme) had told me about that has enabled me to access 80% of my pension whilst continuing in almost full-time employment.

Lesson: do not be dismissive of professional advice, but even professionals are not always fully informed, and there is no substitute for doing your own research
4 users thanked chazza for this post.
Tim D on 05/01/2018(UTC), Money Spider on 05/01/2018(UTC), Michael Grimes on 05/01/2018(UTC), SWWT on 05/01/2018(UTC)
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