Internet Brokers: (i) which ones accept discretionary trusts as clients; and (ii) which allow flexibility about when to take the tax-free lump sum from a SIPP
Fellow subscribers,
UK-domiciled discretionary trusts: is anyone aware of an internet/telephone broker which accepts such trusts as new clients? Hargreaves Lansdown used to but are no longer taking any trusts as new clients, while many others simply don't. Not sure why?
Taking a tax-free lump sum when "crystallising" a SIPP and transferring it into draw-down: Hargreaves Lansdown and some other popular SIPP providers insist that the 25% tax-free lump sum is taken immediately upon moving a SIPP into draw down or the right to receive it is first permanently waived. This is disadvantageous as the tax-free lump sum then leaves a tax-free wrapper and becomes taxable, while if not taken it might grow for sometime. This is not a legal/regulatory requirements and seems a policy adopted by some SIPP providers. Is anyone aware of a SIPP provider which allows more flexibility re the timing of the taking of the tax-free lump sum?
Thanks for any responses and may well be of interest to other subscribers.
Disclaimer
This is not financial advice. Our content is intended to be used and must be used for information and education purposes only. Please read our disclaimer and terms and conditions to understand our obligations.
28 comments
I have used idealing for about 16 years and have found them to be excellent. Easy to use platform and staff available when I have needed them , which has been seldom.
My reply and replacement have been removed. I don't recommend iDealing any more due to slowness of admin requests.
All 3 still visible to me Mr C ... hopefully not a problem at your end .. and very many thanks indeed for your morning comments... much appreciated...
My reply has disappeared.
I don't recommend iDealing any more because their admin is very slow and only contactable by email.
I'm crystallising an SIPP and it's a month since the pension administrator requested a valuation (which took over a week) and then a withdrawal. iDealing refuse to pay the sum in one go, only £50k lumps by cheque. What?
Even the pension administrator amazed and cannot phone iDealing! iDealing ignored then refused a request to send a series of cheques. Each one must be requested daily. Some shocking complaints at https://uk.trustpilot.com/revi...
I can see a reply that you left about an hour ago. If this is the same reply - it has not disappeared
I have been with them for years and are fine except for the great slowness of admin, only contactable by email. I am currently crystallising my SIPP and iDealing are being very slow, unhelpful and stubborn in the transfer of the 25% lump sum to my pension administrator. It's a month since the administrator requested a valuation (which took over a week) and then a withdrawal. iDealing refuse to pay the sum in one go, only £50k lumps by cheque. What?
And not a penny has left my SIPP yet.
So I don't recommend them. Read some reviews at https://uk.trustpilot.com/revi....
I have used iDealing for over 10 years, both traditional account and an ISA. I have not had any problems and find theyrespond quickly to queries or trading issues, especially over the phone. I think their quarterly charges are high, but don't have the details to hand, so worth checking.
I have my SIPP with II. I've already taken to 25% - but, in general, find them pretty efficient & good value. When handling probate iro my mother, they were a bit of a pain, but not to the extent that I'd avoid them.
I see Iweb have been mentioned - I like them a lot, but they have a couple of annoying quirks :
- they refuse to reclaim US tax (eg Somero) on shares in ISA / Trading a/c
- they are a bit quick to designate ITs etc as "professional" (eg EBOX) and won't allow them.
AJ Bell - I hold a couple of trading accounts in Trust for my <18 daughter & nephew. One of v few providers I could find - and they no longer seem to mention these on a quick scan of their website. However, one real pain was that they wouldn't accept an "in specie" transfer. Otherwise, pretty quick & easy - and I operate as a normal trading account. Rather surprisingly, I was able to withdraw cash to my own bank account without any questions - en route to a Junior ISA held elsewhere.
Hope the above helps!
I run discretionary trusts with IG Index, iDealing, X-O (Jarvis Investment Management) and Hargreaves Lansdown. I don’t know which ones are accepting new customers.
I have used iDealing for over 10 years with conventional and an ISA accounts (not my only broker). I find them efficient and quick to respond to queries and trading difficulties, esp on the phone. I think their quarterly charges are quite high, but don't remember the details, so do check that. Otherwise I have never had a problem with them.
Richard
Hi Jayman
Lots of replies re your second question but not the first.
I am one of the executors of a will (surname Jay - hope no relation!!) which sets up a trust allowing us to invest in shares and we have been looking for a self-select broker where we don't end up paying some % of the capital as fees. Like you I found that HL has withrawn this service. The only other one I have found is iDealing. The a/c has yet to be opened so I have no experience of that but do have a look here: https://www.idealing.com/en/si...
Any readers who use or have used iDealing please let us know your experience with them - good or bad.
Cannot comment about a trust holding but IDEALING have proved to be reliable over a number of years. Option to use direct access available.
Costs are reasonable at 20pence per holding per month with 4.99 dealing charge.
Yes. Rathbones:
https://rathbones.com/
Interactive investor seems to be about as flexible as you'll get on withdrawals. You can put any proportion of your pension pot into drawdown. Rather than try to explain the options in detail I'll refer you to the relevant pages on the website which I think are pretty clear explanations.
ii sipp drawdown
ii sipp ufpls
I don't know anything about discretionary trusts.
I've just checked AJ Bell. And they similarly allow proportions of the pot to be placed in drawdown.
I'm considering transferring my pension to ii. Are there any negatives?
Forex fees are very high, but l can live with that, as won't be trading much in foreign stocks in this SIPP.
I'm not actually with ii. So I don't really know any negatives. They look good on paper. I'm thinking of transferring my sipp to ii much later. So I would be interested in any negatives about ii that people are aware of as well.
(I'm not paying any sipp fee at the moment, so it will probably only matter to me when I come to drawdown. Just a one-off UFPLS done so far to use up some unused personal tax allowance.)
The ii forex fee is high but they do support multicurrency so it can be once in and once out (about 3% total) over the life of the sipp on foreign investments. I'm not sure, haven't checked throughly, but I think dividends on foreign investments can be in tne foreign currency as well.
ref ii at least with the sipp you can keep a dollar balance so if you are recycling us sales into replacement us stocks you dont need to suffer the exchange rate hit as long as you ensure you transact sales and replaceemnt purchases in dollars.
Yes, thanks, l had forgotten about holding US$s in a SIPP. Food for thought.
Ii is looking the favourite.
I thought it was a requirement rather than HL policy that on transferring money into drawdown you had to take the 25% tax free lump-sum or lose it.
As I move mine across I am doing it in tranches and using it to fund my ISA for the year as per john2.
Thanks for coming back on this Kevin
Its not a requirement to take the 25% lump sum immediately upon crystallisation and moving funds into drawdown.
Insurers with collective investment options allow you do do this and take the lump sum calculated in stages - i.e. to provide funds to be moved into an ISA or merely augment income in a tax efficient way.
So far I've not found an internet broker whose SIPP products allows this flexibility but also allows it to be crystallised and, at this point, put out of reach of the possible reintroduction of the LTA. Hence, my question to our community.
You might wish to consider what I did with my HL SIPP. I took the entire 25% tax free, then every year until that money ran out I moved £20,000 of it into my ISA, giving me tax free money for ever.
Thanks Jonn2
This is one approach of course but it means the lump sum spend time outside fo a tax-free wrapper which is sub-optimal.
It also means that when you do take income from your ISA it will never be taxed.
For a while you have the choice of putting your money into an interest bearing account, putting it into gilts or investing it in shares outside a tax-free wrapper in which case you will only pay tax on gains made above your capital gains allowance.
To add to john2’s comment gilts are an ideal way to shield the lump sum from tax, as while coupons are taxable income the capital gain at maturity is not.
So if you build a gilt ladder from low coupon gilts (eg TN25, TG25, T26, T26A) then you can take tax free income as each rung matures, and shove 20k per year in to an ISA.
Following site shows the gilts available:
https://www.yieldgimp.com/gilt...
PS iWeb is the cheapest broker I’ve found for holding gilts in a GIA (no custody fees, £5 dealing charge, free to open before Dec 2024). My preferred broker (Freetrade) doesn’t offer gilts yet .
PPS a much better solution is to find a way to keep the lump sum inside tax wrapper in the first place!
Hi John, but don't you have to pay income tax, on the money you move into an ISA, if your income is over the personal allowance?
I see HL now have cash ISAs where you can move cash from your Share ISA to, this only has just been announced.
HL SIPP fees look too high compared to ii.
What I did was to withdraw 25% from my SIPP tax free, then feed it into my ISA over a period of years. No tax was paid at any point. Income tax was not an issue - I was living on the balance of the tax free 25% plus dividends from my ISA. I was careful to keep withdrawals from my SIPP below the income tax threshold.
The only point at which I might have had to pay tax was if after withdrawing my tax free money and investing it in shares outside of a tax-free wrapper I had realised gains above my capital gains allowance. This was not the case for me, but it would have been churlish to protest too much if I had made gains that great.