I understand that normally, you wouldn't normally contribute to a SIPP after 5 years of non-residence, but in my case, I do not want to make new contributions into the SIPP, but rather transfer balances from old pension funds into a new SIPP and am just checking in case there are any hidden pitfalls.
Has anyone here started a UK SIPP after more than 5 years of non-UK residence?
Yes, after 18 years. No issues other than a 50% increase in fund value which will result in more tax being payable. The tax payable on cashing in will exceed the TOTAL contributions made, what a joke.
I need to check it but thought there may be a way to get this tax free by being non-resident but not remitting back to Malta...
Oh that would be interesting, I thought it had to be taxed in the UK or Malta. I suppose I could try & drip feed it at the personal allowance rate but it will probably grow faster than that.
I haven't looked into it, but suspect you could be taxed where resident so if it is taxed then in Malta, but remains non-taxable by virtue of you not remitting it to Malta, then maybe you could get it tax free. It wouldn't surprise me if it is nevertheless taxable in Malta under some rule.
How did you manage to open a UK SIPP while not resident there? I was blanked by everyone on the grounds of not being a resident.
Also, I didn't understand the reference to tax payable. Why would you want to cash in an entire UK pension fund? Above the 25% tax-free portion, it's classed as income, so it will be taxed if it's above the income tax threshold in any given year. TBH, that seems reasonable to me. SIPP contributions get tax relief so this is supposed to balance out the tax paid on withdrawals.
Unfortunately, contributions while resident outside the UK are capped at £2,880 (and 0 after 5 years). I mean, contributions that will get the government top-up. You can still pay in what you want but there is no tax relief, so there's not much point.
It was an existing personal pension that I transferred to a SIPP. No additional contributions whilst non resident have been raised made.
It's with Hargreaves Lansdown.
The fund has been growing at a compound rate of 17.6%, the quicker it's cashed in the better as in just over 4 years it will more than double the tax liability
I have a similar situation. I contributed to a FSAVC with Barclays Life for a few years in the late 90's. Barclays then passed it to ReAssure 6 or 7 years ago.
I've not given it attention to it over the years and it's grown slowly. The value is less than £20k. The funds are volatile (99.17% equities) and 95.46% UK listed equities.
I'm thinking about opening a HL SIPP, transferring the units in (if it's a fund that HL holds) and then holding 2 or 3 funds that are mostly equity, not focussed on UK.
I'm 20 - 23 years from retirement and have a moderate appetite for risk.
Does this approach make sense?
Yes, however I suspect HL no longer accepts Swiss clients being non EU, it's a fairly recent change.
It's a fair point. I asked them.
The first answer was that as long as I'm resident in an EEA country, it's ok. I reminded him that Switzerland is not in the EEA. This morning I got an email saying that HL has recently relaxed their position and will allow a SIPP account to be opened for Swiss resident.
Although, I'm not sure if I'll be allowed to put any more in (from uk rental income)
FMF - It's a broad question, do you have any fund, or direct equity tips for long-term growth?
Yes, my favourite Fund www.fundsmith.co.uk . Fundsmith launched an investment trust a couple of weeks ago which I now have about 10% of my assets in, I intend to increase thus to 25-30% over the next few months. My UK pension was 100% invested in Fundsmith & has increased by over 120% even with last months fall in global markets.
Alternatives would be Lindsal train Global equity or S&P 500 index tracker, as a long term investor you should be pretty much invested in equities as you can stay invested in a SIPP throughout retirement selling some of the fund every year. Your investment horizon is possibly 50 years.
I spoke to them 2 weeks ago and was definitively told it was a non-starter for Swiss residents, are you saying this has now changed?
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I hope you are lucky as I find HL very good & cashing out my UK pension has been easy, I got my 25% tax free lump sum within a week of my 55th Birthday, I only spoke with them the first time 3 weeks before,
Thanks for bringing this thread up to date.
I have also just had a UK personal pension mature with Reassure having been based in Switzerland for the last 20 years. The value is around £88k and I am looking to invest in a SIPP as this appears a better option than a QROPS in Malta
If I take the 25% tax free lump sum, do you know if this is taxable in Switzerland, I am assuming I have to declare this on my Swiss tax return?
Hoping to reanimate this thread... Just wondering if anyone has found any other SIPP providers in the UK willing to open an account for a Swiss resident holder of UK personal pension plans - and actually experienced their service?
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The reason I did not transfer to a slightly cheaper tax canton was potential BS from a second pension provider.
Since you transferred the growth is larger in CHF & Euros than GBP!
I’m currently trying to get a UK DB pension converted out to a UK based SIPP.
But I am still not clear if I will pay tax in the UK or here on taking a (first) drawdown.
I don’t intend to trigger the full 25% one off allowance, possible according to UK HMRC rules, on the perhaps incorrect assumption, that tax would be liable in the UK.
However, if it is the case that I would be liable to pay tax here - and not in the UK - at an attractive rate on a bigger withdrawal, then I could be tempted to take the 25% plus a further 25% (50%) in total, changing tactics.
I am resident and in full time employment here for the past 7 years and will be for the foreseeable future.
Advice appreciated, thanks
From a UK tax perspective, you can withdraw 25% tax free from your SIPP. You can then draw down tax-free sums every year after that, as long as they remain below the UK tax threshold. As far as I know, you can’t withdraw 50% tax free on the grounds that you live outside the UK. Your SIPP Provider presumably withholds a chunk of any attempted lump sum withdrawal over 25%.
As long as you're not desperate for cash it’s easy enough to withdraw your SIPP tax free over a period. 25% in one initial lump, followed by a max of £10K or so every year after that to stay under the tax threshold (if it's your only UK income). Or bigger annual sums without the initial 25%. Of course, you might be better off leaving it alone as much as possible and allowing the fund to increase in size, using it for income, and keeping annual withdrawals below the taxable level. Once you start withdrawing you can’t put anything back in so be careful that you really want/need to make that big initial withdrawal. If you plan to one day return to the UK it’s best to leave it alone, given the UKP-CHF exchange rate. In fact you’d be better off channelling CHFs into your UK savings to take advantage.
For the fine detail of how and when tax is paid, best speak to your UK provider. As for Swiss tax liability, you don’t pay tax, or v little, on the sums in the fund but you will on withdrawn cash.