Small Pot Lump sum

intowhere · 17 November 2017 at 3:00PM

Hi
Is there a limit of 3 small pot lump sums that you can withdraw? I am currently looking to save £2880 per year for my wife and then withdrawn £3600, but speaking from Pensionwise, there is a limit of 3 small pot lump sums that you can withdraw. Is this right? Would any subsquent withdraws need to be done as a lump sum withdrawl (UFPLS).

Thanks

xylophone · 17 November 2017 at 5:05PM

Your wife is over 55 and has no earned income? You are planning to proceed as in this thread?

It is not a case of using the small lump sum rules.

http://forums.moneysavingexpert.com/showthread.php?t=5580163

intowhere · 17 November 2017 at 5:32PM

Yes - I plan to proceed as per the above thread. No earned income. What should I be using if not the small lump sum rules?

xylophone · 17 November 2017 at 5:56PM

Your wife has no earned income so is limited to a net contribution of £2880 with the pension provider claiming tax relief of £720.

Your wife would simply be contributing to a pension and using drawdown to access it.

She would be entitled to a 25% tax free pension commencement lump sum with the balance taxed as income in the year of receipt.

If the balance is within her tax free personal allowance she would end up paying no tax on it, although it might be taxed before receipt so that she needed to reclaim the overpaid tax.

She could continue to make the contribution of £2880 and receive tax relief up to age 75.

She can take the 25% PCLS in succeeding years with the balance taxed as income.

See post 38 and 45.

intowhere · 17 November 2017 at 6:33PM

The pension is with virgin and they don't allow drawdowns. The options she has are lump sum withdrawal or small pot lump sum.

Small Pot Lump sum

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