I too thought it would be very complicated. I have three separate DB pensions, income from my SIPP in drawdown with HL, and the state pension to come later this year. To my surprise, HMRC dealt with it perfectly, applying most of my tax feed allowance to the largest DB, the remainder of the allowance to the next DB, and taxed the remainder at the appropriate rate.
I expected to have to self-assessment but it ain’t been necessary at all.
Tax as a pensioner
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- Lemon Quarter
- Posts: 1717
- Joined: March 22nd, 2020, 7:27 pm
Re: Tax as a pensioner
How do you actually pay yourself from SIPPs and other pensions where there's a pot of shares/money? Do you tell the provider to pay me X amount per month? And how does this work if there's insufficient cash sitting in the account? Thanks.
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- Lemon Half
- Posts: 7479
- Joined: November 4th, 2016, 6:11 pm
Re: Tax as a pensioner
It's up to you to make sure the cash is there, either from dividends or by selling shares.MrFoolish wrote:How do you actually pay yourself from SIPPs and other pensions where there's a pot of shares/money? Do you tell the provider to pay me X amount per month? And how does this work if there's insufficient cash sitting in the account? Thanks.
You tell the provider how much to pay you, and they run it through the payroll.
Scott.
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- Lemon Pip
- Posts: 72
- Joined: October 22nd, 2019, 3:11 pm
Re: Tax as a pensioner
I made this enquiry only yesterday with my SIPP provider, iWeb. I plan to commence drawdown next year. It's simply a case of completing a form stating how much you require (in my case a small monthly amount to utilise my personal tax allowance) and then making sure the SIPP account has enough cash to fund the payment each month.MrFoolish wrote:How do you actually pay yourself from SIPPs and other pensions where there's a pot of shares/money? Do you tell the provider to pay me X amount per month? And how does this work if there's insufficient cash sitting in the account? Thanks.
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- Lemon Slice
- Posts: 554
- Joined: November 10th, 2016, 10:04 am
Re: Tax as a pensioner
My SIPP has a default of selling enough of your largest holding to generate sufficient free cash each month if insufficient dividends have arrived to cover the monthly pension payment.MrFoolish wrote:How do you actually pay yourself from SIPPs and other pensions where there's a pot of shares/money? Do you tell the provider to pay me X amount per month? And how does this work if there's insufficient cash sitting in the account? Thanks.
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- Lemon Half
- Posts: 7479
- Joined: November 4th, 2016, 6:11 pm
Re: Tax as a pensioner
Interesting, who is that with? I presume they make a standard dealing charge for this? So if you were, say, £1 cash short, they would sell £1 worth of shares, and charge you a tenner or so for it?DrBunsenHoneydew wrote:My SIPP has a default of selling enough of your largest holding to generate sufficient free cash each month if insufficient dividends have arrived to cover the monthly pension payment.MrFoolish wrote:How do you actually pay yourself from SIPPs and other pensions where there's a pot of shares/money? Do you tell the provider to pay me X amount per month? And how does this work if there's insufficient cash sitting in the account? Thanks.
Scott.
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- Lemon Slice
- Posts: 554
- Joined: November 10th, 2016, 10:04 am
Re: Tax as a pensioner
It's a Cofunds account, which only holds "unit trusts" with no charge to sell.swill453 wrote:Interesting, who is that with? I presume they make a standard dealing charge for this? So if you were, say, £1 cash short, they would sell £1 worth of shares, and charge you a tenner or so for it?DrBunsenHoneydew wrote: My SIPP has a default of selling enough of your largest holding to generate sufficient free cash each month if insufficient dividends have arrived to cover the monthly pension payment.
Scott.
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- Lemon Slice
- Posts: 350
- Joined: November 19th, 2016, 2:44 pm
Re: Tax as a pensioner
Been doing it for 17 years
Decide how much money you need per year
Sell appropriate quantity of equity and/or bonds -keeping your Asset Allocation right a week or two before withdrawal so monies sitting in your cash account
Notify platform you want to withdraw the money
Calculate the amount of tax that has been charged -platforms usually charge at the 20% rate
If tax is too much reclaim using R55 form and reclaimed tax in your bank account within a month
That’s it
xxd09
Decide how much money you need per year
Sell appropriate quantity of equity and/or bonds -keeping your Asset Allocation right a week or two before withdrawal so monies sitting in your cash account
Notify platform you want to withdraw the money
Calculate the amount of tax that has been charged -platforms usually charge at the 20% rate
If tax is too much reclaim using R55 form and reclaimed tax in your bank account within a month
That’s it
xxd09