Sipp Query, Withdrawal & Personal Tax Allowance mjfp509

#1
Although a few years to go yet, I would like to retire at 55 if possible and am thinking of starting a SIPP, which will provide a yearly income until I reach 60, when my DB pension will start.



Lets imagine I have £57,500 in my SIPP by the time I reach 55, so £57,500 shared by 5 years is £11,500 per year (personal tax allowance from April). By the time I reach 60, the SIPP will be exhausted.



Obviously, I am aware the personal tax allowance will have risen by then, so these calculations are only hypothetical on current rates.



Can this amount (£11,500) be withdrawn each year tax free, as I won't be working and I would be using this amount as my retirement annual income?



Thanks.

#2
Don't forget your 25 % TFLS.





So you could actually have a pot of £76666 and withdraw it over 5 years to zero and pay no income tax.





Year 1 25% tax free (£19166) + Tax allowance (£11500)

Years 2 -5 £11500 each year.





Gives you an average annual retirement income of £15333.





Figures rounded and not account of inflation or investment gains of course.

#3
Theoretically you can now have upto £22500 taxable income before you'd have to pay any income tax (in 2017:18) but that would involve a very specific mix of pension (or wages/business profits), savings interest and dividends



Your sipp should be fine providing you genuinely have no other income in the years you draw down from the sipp

#4



Don't forget your 25 % TFLS.





So you could actually have a pot of £76666 and withdraw it over 5 years to zero and pay no income tax.





Year 1 25% tax free (£19166) + Tax allowance (£11500)

Years 2 -5 £11500 each year.





Gives you an average annual retirement income of £15333.





Figures rounded and not account of inflation or investment gains of course.
Originally posted by NoMore


Or could use UFPLS (google it) and withdraw £15333 each year with no tax to pay.

#5
Thanks zagfles, forgot about UFPLS, slighlty different way to withdraw it but the maths work out the same either way for average yearly tax free income over the 5 years.

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