New Tax Year - any benefit in waiting

Glengowrie
Glengowrie Posts: 14 Forumite
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in Pensions, annuities & retirement planning
I have a small stakeholder pension with Legal & General (about £7500). I am no longer working and am a non taxpayer. Under the new rules announced in the Budget I think I can cash this small pension in full and with no tax liability. My last annual benefit statement dated May 2013 showed the plan value at 5 April 2013, so I assume I will get another statement soon showing value to 5 April 2014. Is there any benefit or disadvantage in waiting till the next statement before applying to cash in the pension?

Comments

  • Linton
    Linton Posts: 17,160 Forumite
    Name Dropper First Post First Anniversary Hung up my suit!
    You cant cash it in until the new rules start in 27th March. Then there is the question of how long it will take the pension providers to have their processes in place. So you are most unlikely to be able to cash it in before the 5th April anyway. If you are in no hurry I would suggest waiting until things have settled down a bit.

    You will only have no tax liability if your total income including the cash withdrawal (-25% for the tax free lump sum) is less than the tax allowance, £10000 after 5th April.
  • Glengowrie
    Glengowrie Posts: 14 Forumite
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    Thanks for that very helpful advice. That's really good news for me.
  • ScottyLP
    ScottyLP Posts: 87 Forumite
    Also, you have to be over the age of 60. If not, you'd have to wait a year before you can access the whole fund.
  • Glengowrie
    Glengowrie Posts: 14 Forumite
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    I thought the Budget changed that age restriction and lowered it to 55.
  • atush
    atush Posts: 18,726 Forumite
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    It changes next april. s far as I know, it remains 60 til then.
  • TBC15
    TBC15 Posts: 1,452 Forumite
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    Linton wrote: »

    You will only have no tax liability if your total income including the cash withdrawal (-25% for the tax free lump sum) is less than the tax allowance, £10000 after 5th April.



    Is the 25% taken into consideration with respect to tax allowance?
  • Linton
    Linton Posts: 17,160 Forumite
    Name Dropper First Post First Anniversary Hung up my suit!
    TBC15 wrote: »
    Is the 25% taken into consideration with respect to tax allowance?


    The 25% is completely outside the tax system and does not affect your tax liabilities in any way.
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