SIPP for non-Income Taxpayer

[ReformedCharacter]

I am over 58 years old and all my income comes from dividends, I have no other income and it is below my personal allowance. I have been contemplating getting a SIPP but I'm unsure about the rules regarding withdrawal. I assume that I can place £ 2880 into a SIPP each year and get a tax credit of £720. What are the restrictions on withdrawal though? I'm not planning on doing it, but presumably I can't put the money in, get the tax credit and then take out £3600. Given that I'm over 55, when can I decide to start taking income or capital from it? I'm also unsure what other restrictions there are on taking money out of the SIPP given the recent changes in legislation.

Any help would be appreciated, I have tried to search for these answers but they don't seem to be consistent. Thank you.

RC

[swill453]

I assume that I can place £ 2880 into a SIPP each year and get a tax credit of £720. What are the restrictions on withdrawal though? I'm not planning on doing it, but presumably I can't put the money in, get the tax credit and then take out £3600.

You can, basically. But the thing you need to watch out for is charges, especially those for "closing" your SIPP shortly after opening it. It might not be worthwhile.

You could let it accumulate for a few years and pay minimal charges, if you choose your SIPP provider carefully, then take it all out at once.

Also be careful if you become a taxpayer once your state pension starts. The tax relief will be negated by tax, and you will only benefit from the tax-free 25% element of the pension (so you'd benefit only by 20% of 25% of £3600, or £180 per year).

Scott.

[ReformedCharacter]

You can, basically. But the thing you need to watch out for is charges, especially those for "closing" your SIPP shortly after opening it. It might not be worthwhile.

You could let it accumulate for a few years and pay minimal charges, if you choose your SIPP provider carefully, then take it all out at once.

Also be careful if you become a taxpayer once your state pension starts. The tax relief will be negated by tax, and you will only benefit from the tax-free 25% element of the pension (so you'd benefit only by 20% of 25% of £3600, or £180 per year).

Scott.

Much appreciated, thanks Scott.