Redeeming from SIPP

[iftg]

Several years ago I made 3 investments, each of £16,000 into SIPP, complemented by £4,000 from the government. The current value of my portfolio is £50,000. My only other income is bank interest (£5,000). I am over 55. How much can I withdraw from SIPP in 2025-26 tax year without paying income tax?

 

[Galactus2024]

Withdrawal from SIPP's is treated as income therefore subject to tax at normal rates, however, I believe you are allowed a percentage drawdown free of tax but you need to talk to your SIPP provider who will know the correct figures. I did exactly what you are doing and found out the exact tax free amount from my provider

 

[Frank the Insurance guy]

You need professional advice from a Financial Adviser - doing the wrong thing could be costly! I suspect you can withdraw 25% tax free, but get confirmation before you do!

 

[WaveJumper]

Yes the figure is 25% tax free assuming you have not drawn down elsewhere. Speak to Pension Wise for advice they are very good and it's independent.

 

[DontAsk]

Several years ago I made 3 investments, each of £16,000 into SIPP, complemented by £4,000 from the government. The current value of my portfolio is £50,000.

£60k -> £50k over several years? What on earth was it invested in?

I would be wanting to know if I was mis-sold an investment before I started withdrawing.

You can take a 25% limp sum tax-free and then be taxed (according to your circumstances, i.e. other income) on subsequent withdrawals or each withdrawal can be 25% tax free with the remainder taxable. Talk to the SIPP provider about your options or visit one of many pension advice sites.

 

[DontAsk]

Yes the figure is 25% tax free assuming you have not drawn down elsewhere. Speak to Pension Wise for advice they are very good and it's independent.

I, very strongly, believe it's 25% per pot so, even if you have another pot in drawdown, you can still take 25% from this one.

I have one crystalised pension from which I have taken 25% with others still uncrystallised.

 

[GLAbusiness]

I have taken 25% from different pots at different times (with advice from my IFA). One you have taken the 25% the rest will be subject to tax. Nothing to do with tax years.


Have you taken any money from the pots in previous years?

 

[iftg]

I have taken 25% from different pots at different times (with advice from my IFA). One you have taken the 25% the rest will be subject to tax. Nothing to do with tax years.


Have you taken any money from the pots in previous years?

No

 

[iftg]

To be clear, I understand that I can take out 25% of the pot as a lump sum. The question is, how much of "taxable" money can I redeem without paying tax in my particular circumstances (£5,000 in bank interest)?

 

[GLAbusiness]

I am not an accountant or financial adviser.

I would think the answer must be very close to zero

 

[MikeJ]

Your tax free allowance will apply, so about £12.5k in total. You're also allowed up to £5k in savings allowance which covers the interest you've received.

Tax on savings interest

You do not pay tax on your savings interest if you're on a low income.

www.gov.uk

(this isn't advice, it's what I understand the rules to be. Get proper advice)

 

[MikeJ]

This is worth a watch...

https://www.moneysavingexpert.com/pensions/how-pensions-work/#take

Also, assuming you're somewhere between 57 (the point at which you can access a pension) and 66 (current age for government pension) you should look at drawing it down now. Once you get your old age pension, that effectively wipes out your tax free allowance so your pension will be taxable (other than the first 25%, as above). Get it out before you access your OAP, and it's more tax efficient.

(see above disclaimer about rules and advice)