Where's the fault in this logic?

[Fred Bloggs]

Presently, I put £1000 a month into my SIPP from the Ltd Co as a Co contribution, £12k a year.

This year, the Ltd Co has a "spare" £3k that I could choose to take as a divi and pay the 21% corp tax on (£630, or 21%) effectively netting me £2370 in my hand after corp tax.

Or, I could pay the £3k into my SIPP increasing my SIPP to £15k a year but, as I am 52 years of age, I immediately take 25% (£3750) of the £15k contribution out as a tax free lump sum. The Ltd Co saves the £630 Corp Tax and I get the £3750 in my hand to do what I want with, the chancellor gets zip.

I can do this every year from now on until I retire.

Where's the faulty logic in this?

[RSoles]

Yay! I'm younger than someone on here ( just).

Immediate vesting pension. I've been looking at this too; though plans are on hold as I've just hit the bench.

For an example http://www.standardlife.co.uk/conten...ppp/ivppp.html

Not a suggestion, just the first google result. Rules change soon though
Logic seems sound to me, and I need to make up for a lot of years wasted in final salary schemes which subsequently went broke!

RS

[cykophysh39]

Why don't you buy some Adult features for your satelite package?
Some DVD players for your second home, Have some moles removed from your garden.

From what I hear this is the new tax dispensations they're extending to Contractors

[expat]

Presently, I put £1000 a month into my SIPP from the Ltd Co as a Co contribution, £12k a year.

This year, the Ltd Co has a "spare" £3k that I could choose to take as a divi and pay the 21% corp tax on (£630, or 21%) effectively netting me £2370 in my hand after corp tax.

Or, I could pay the £3k into my SIPP increasing my SIPP to £15k a year but, as I am 52 years of age, I immediately take 25% (£3750) of the £15k contribution out as a tax free lump sum. The Ltd Co saves the £630 Corp Tax and I get the £3750 in my hand to do what I want with, the chancellor gets zip.

I can do this every year from now on until I retire.

Where's the faulty logic in this?

Your pocket gets £3750 and your SIPP has £11250.

Instead of £12000 for option A.

There is no fault in the logic; beware of the imminent increase of lower age limit to 55; and of course beware of tax rule changes in the future. And I believe that you must NOT invest the cash that you take out of the SIPP into anything that looks like retirement savings.