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Taking 25% Tax-Free Withdrawal from HL SIPP at 55

Including Financial Independence and Retiring Early (FIRE)
Gostevie
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Taking 25% Tax-Free Withdrawal from HL SIPP at 55

#126698

Postby Gostevie » March 21st, 2018, 12:17 pm

Dear Fools,

I am not sure if this is right board on which to post this, and apologise if it isn't. Perhaps somebody can redirect me if that is the case.

I turn the grand old age of 55 in a few months and have a SIPP with Hargreaves Lansdown. My wish is to grab the 25% tax-free withdrawal as soon as possible after that - not because I particularly need the money but because I worry that some current or future Chancellor of the Exchequer may withdraw that opportunity.

Does anybody reading this have any experience of withdrawing the 25% from a Hargreaves Lansdown SIPP that they would be kind enough to share? What are the mechanics of it? Does HL make it easy or are they obstructive? Do they demand paying them hundreds of pounds for 'financial advice' before agreeing to the withdrawal? How long does it take?

With thanks and regards,

Gostevie

langley59
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Re: Taking 25% Tax-Free Withdrawal from HL SIPP at 55

#126715

Postby langley59 » March 21st, 2018, 12:55 pm

I did this 4 years ago with HL for the same reasons as you. From memory it was fairly easy, various forms to fill in and sign, and they did not charge me beyond a GAD maximum income calculation fee (£75 I think). NB. I have since moved from capped drawdown to flexible drawdown so I don't think the GAD calculation is relevant any more.

argoal
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Re: Taking 25% Tax-Free Withdrawal from HL SIPP at 55

#126718

Postby argoal » March 21st, 2018, 1:04 pm

I did the same last year for the same reasons. HL were helpful and I don't think there was any charge for the service.

I'm pretty sure that you won't have any problems with them.

Good luck.

uspaul666
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Re: Taking 25% Tax-Free Withdrawal from HL SIPP at 55

#126732

Postby uspaul666 » March 21st, 2018, 2:07 pm

We phoned up HL recently regarding this very item and they were nothing but helpful and informative. Not a lot of point paying the extra to HL then not taking advantage of their superior customer services...
I could add we were told that in particular, it wouldn’t affect rules regarding limits on further contributions.

TUK020
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Re: Taking 25% Tax-Free Withdrawal from HL SIPP at 55

#126753

Postby TUK020 » March 21st, 2018, 3:53 pm

Did this nearly 3 years ago, with HL, and for much the same reason.

No problems, no fuss. Money now recycled into ISAs

tuk020

Gostevie
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Re: Taking 25% Tax-Free Withdrawal from HL SIPP at 55

#126872

Postby Gostevie » March 21st, 2018, 9:17 pm

TUK020, uspaul666, argoal, langley59,

Many thanks for your helpful replies. I am suitably reassured.

Foolish regards,

Steve

mickeypops
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Re: Taking 25% Tax-Free Withdrawal from HL SIPP at 55

#127424

Postby mickeypops » March 23rd, 2018, 9:34 am

I've done exactly this for my and Mrs MP's SIPPs within the last 12 months. HL were very helpful. The day I sent in the completed form - along with a photocopy of my passport to prove my age - I sold enough assets in the account to generate the cash to cover the 25% value. They paid out the cash to my bank, then moved the remaining assets *** (with a bit of leftover cash) to a new SIPP drawdown account. Make sure that you make NO WITHDRAWALS from the drawdown account if you wish to continue to contribute to a SIPP or other pensions, or you are very restricted to further tax relief on new contributions.

*** They helpfully advised that I left a little (£100) in the original pre-drawdown SIPP account so that Icould continue to make contributions to it.

Hope this helps.

MP

hiriskpaul
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Re: Taking 25% Tax-Free Withdrawal from HL SIPP at 55

#127673

Postby hiriskpaul » March 23rd, 2018, 8:00 pm

Did this last year. As others have said HL make it all very straightforward. Filled in a form, sent a passport photocopy and my fixed protection certificate and HL did the rest. Best to fill the forms in first and then agree a precise crystallisation date by phone. After that you just have to raise the 25% cash in your SIPP, which must be cleared prior to payment to your bank.

UncleEbenezer
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Re: Taking 25% Tax-Free Withdrawal from HL SIPP at 55

#127715

Postby UncleEbenezer » March 24th, 2018, 8:41 am

Been contemplating this for a while. My purpose in taking the lump sum would be specifically to buy a house, since the insecurity of the "gig economy" rules me out for a mortgage.

Unlike most of you, I'm reluctant to take the money before I have to, because I see a risk of putting myself the wrong side of a future rule change. The concern is, if I should have a financially "good" year - one where my income takes me to higher rate tax - I want to be able to shelter that extra in the pension. If I take the lump sum, that might limit my right to do so if the rules change again.

Alaric
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Re: Taking 25% Tax-Free Withdrawal from HL SIPP at 55

#127721

Postby Alaric » March 24th, 2018, 9:01 am

UncleEbenezer wrote: If I take the lump sum, that might limit my right to do so if the rules change again.


You may well have little choice. Being able to put money in, get tax relief, take money out without it being taxed, put money in, get tax relief is such an obvious round trip at the expense of other taxpayers that there would be little opposition to it being curtailed, even if it does present problems to those undertaking second careers.

Perhaps there are enough people in your position to make a difference. Taking the lump sum whilst continuing to work could be an advantage to anyone with a mortgage wishing or needing to pay it off. Someone with an interest only mortgage perhaps.

hiriskpaul
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Re: Taking 25% Tax-Free Withdrawal from HL SIPP at 55

#127729

Postby hiriskpaul » March 24th, 2018, 10:00 am

I took my 25% PCLS to mitigate the cost of exceeding the LTA, not because I was concerned about the tax free benefit being withdrawn. I would rate the risk of that happening without warning as very low. Pension rule changes have always been announced in advance of implementation and I would be very surprised if a major change such as abolishing the tax free nature of the PCLS or changing the eligibility criteria would happen without warning.

If there is no financial reasons to withdraw the PCLS I think it is better not to. There are disadvantages to taking it, such as an immediate increase in the value of one's estate and taxes on gains made on investing the PCLS.

GeoffF100
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Re: Taking 25% Tax-Free Withdrawal from HL SIPP at 55

#127795

Postby GeoffF100 » March 24th, 2018, 3:10 pm

UncleEbenezer wrote:Been contemplating this for a while. My purpose in taking the lump sum would be specifically to buy a house, since the insecurity of the "gig economy" rules me out for a mortgage.

Unlike most of you, I'm reluctant to take the money before I have to, because I see a risk of putting myself the wrong side of a future rule change. The concern is, if I should have a financially "good" year - one where my income takes me to higher rate tax - I want to be able to shelter that extra in the pension. If I take the lump sum, that might limit my right to do so if the rules change again.

The are rules against recycling:

https://adviser.royallondon.com/technic ... free-cash/

rabbit
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Re: Taking 25% Tax-Free Withdrawal from HL SIPP at 55

#127853

Postby rabbit » March 24th, 2018, 7:24 pm

Gostevie wrote:Dear Fools,

I am not sure if this is right board on which to post this, and apologise if it isn't. Perhaps somebody can redirect me if that is the case.

I turn the grand old age of 55 in a few months and have a SIPP with Hargreaves Lansdown. My wish is to grab the 25% tax-free withdrawal as soon as possible after that - not because I particularly need the money but because I worry that some current or future Chancellor of the Exchequer may withdraw that opportunity.

Does anybody reading this have any experience of withdrawing the 25% from a Hargreaves Lansdown SIPP that they would be kind enough to share? What are the mechanics of it? Does HL make it easy or are they obstructive? Do they demand paying them hundreds of pounds for 'financial advice' before agreeing to the withdrawal? How long does it take?

With thanks and regards,

Gostevie


I did this with HL last year. There were a few simple forms, I don't recall any charges. Very straightforward, and it took about a week from instruction to payout. HL staff were very helpful and obliging as usual. Certainly no pressure to use an adviser.

bungeejumper
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Re: Taking 25% Tax-Free Withdrawal from HL SIPP at 55

#127970

Postby bungeejumper » March 25th, 2018, 6:13 pm

Another good experience with HL. I took the 25% on most of my SIPP last autumn, and it was a simple matter of filling in a form. I had only recently transferred my pension funds into the SIPP, and I would have to say that the HL telephone staff were superb throughout the whole process. Including sorting out another pension provider's cock-up, for which they had no responsibility! (Other pension provider had attached a complete stranger's NI number to a policy I'd opened thirty years ago. :roll: )

So a positive experience all round.

BJ

gadgetmind
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Re: Taking 25% Tax-Free Withdrawal from HL SIPP at 55

#134923

Postby gadgetmind » April 26th, 2018, 2:22 pm

hiriskpaul wrote:Pension rule changes have always been announced in advance of implementation


True, but I can think of at least two where implementation was at midnight on the day of the announcement!

TedSwippet
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Re: Taking 25% Tax-Free Withdrawal from HL SIPP at 55

#135019

Postby TedSwippet » April 26th, 2018, 11:56 pm

gadgetmind wrote:True, but I can think of at least two where implementation was at midnight on the day of the announcement!

I can also think of some where the announcement was ahead of implementation, but where the effects were retroactive and, for some people, could not be mitigated by any course of action that did not require a functioning time-machine!

Gostevie
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Re: Taking 25% Tax-Free Withdrawal from HL SIPP at 55

#145036

Postby Gostevie » June 11th, 2018, 9:05 pm

Just to bring this to a conclusion, today I received the 25% tax-free lump sum as requested, shortly after my 55th birthday.

As others have suggested, the process was easy and the customer service from HL was excellent.

Can hardly believe I am now officially a pensioner - it barely seems like yesterday I was using a Young Person's railcard! :o

Gostevie


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