New SIPP for wife

[uryjm]

My wife is thinking of retiring at 55 in November next year, but she can't draw any of her pensions until she's 62.
I was thinking she should open a SIPP and we should deposit 30k from our ISA's into it this tax year and another 30k next tax year. Therefore, I assume, she gets effectively 36k deposited this year and same again next year with tax relief at 20% (she's a basic taxpayer).
I think she she can then start withdrawing from this SIPP from November next year tax free as long as she doesn't take more than 11k per year?
Assuming I'm correct, who is a good SIPP provider who'd let us deposit this amount into one of the Vanguard Life Strategy funds?
Thanks for any advice.....

[Alaric]

I was thinking she should open a SIPP and we should deposit 30k from our ISA's into it this tax year and another 30k next tax year. Therefore, I assume, she gets effectively 36k deposited this year and same again next year with tax relief at 20% (she's a basic taxpayer).

If she doesn't have any earned income, the maximum contribution is £ 2880.

[DrBunsenHoneydew]

Therefore, I assume, she gets effectively 36k deposited this year and same again next year with tax relief at 20% (she's a basic taxpayer).

If she is a BR taxpayer, 30k deposited becomes £37.5k in the SIPP (it is calculated as: 30 is 80% of 37.5). This means she must have income of £37.5k in both tax years (and that's in the 7 months Apr-Oct next year if no earnings from Nov onwards).

[uryjm]

Thanks, so from what you're saying, the maximum she can put into a SIPP (and work pension) would be equal to her gross income for that tax year?

[DrBunsenHoneydew]

Yes, limited to gross earnings subject to the minimum as Alaric mentioned above: put in £2880 and it is made up to £3600 in the SIPP. Even a non-taxpayer is given that allowance.

[uryjm]

So, she earns 14k a year gross, she can put that in to a SIPP this tax year ending March, the same next year, April 2017 to 2018, and then for the 7 months April 2018 to November 2018? I don't suppose there's any "Carry forward" allowances from previous tax years?

[DrBunsenHoneydew]

Not quite! - she can only put in 14k gross in the SIPP for the full-earning years after you have reduced the 14k by the value of any contributions from employers or her own contributions to the employer's scheme. (If she's in a defined benefit plan e.g. final salary or career-average salary scheme, the rules are more complex but similar in principle).

There are 'carry-forward' allowances, but they are for people whose annual earnings exceed the maximum £40k annual contribution allowance and they want to pay more than £40k this year. They can use up unused parts of previous years' £40k.

[uryjm]

Great DR, thanks for your help!