LTA and BCEs
Comments
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In the example in your last paragraph (someone tell me how to get a quote in a yellow box please):
Assuming you have already used 100% of your LTA and you wish to crystallise another £300k there will be a further LTA test which will reveal that you have no remaining LTA. You will have the choice of whether to take £300k - 55% = £135k as cash or to move £300k - 25% = £225k into your drawdown fund. Once there withdrawals will be taxed in the normal way0 -
EricThanks for all the replies, to add some more context.....
Pension A) transfer would be £970k (error on my behalf). The annual pension is £22500 so a good transfer value IMO
I'm 57 later this year
Some details are missing to make a bit more sense of the transfer value:-
is the £22.5k everything without no lump sum coming to you and from what age is that taken
(i.e. if you take it now or when?)
What is the guaranteed increase on your DB e.g. RPI with 5% max?
Do you have a spouse? What would she get if you died first?I am just thinking out loud - nothing I say should be relied upon!
I do however reserve the right to be correct by accident.0 -
LTA just as IHT is a good problem. Tax on more money at the end of the day and there are numerous ways to mitigate.
Don't get hung up on LTA unless you are crystallising the whole lot over the next few years. Jo Bloggs does not eally need to do that.
If LTA is an issue leave DB where it is and take benefits as they are prescribed to you.
You need solid advice about what you need and not just about transferring or LTA issues.{Signature removed by Forum Team - if you are not sure why we have removed your signature please contact the Forum Team}0 -
An additional tax that deliberately punishes diligent saving and good investment performance is hardly a "good problem". Aside from the assorted protections, seemingly not applicable here, there are virtually no ways to mitigate the LTA penalty. It is designed to be unavoidable.LTA just as IHT is a good problem. Tax on more money at the end of the day and there are numerous ways to mitigate.
You are talking arrant nonsense. Once at the LTA, crystallising the whole lot immediately would be many people's smartest move.Don't get hung up on LTA unless you are crystallising the whole lot over the next few years. Jo Bloggs does not really need to do that.0 -
An additional tax that deliberately punishes diligent saving and good investment performance is hardly a "good problem". Aside from the assorted protections, seemingly not applicable here, there are virtually no ways to mitigate the LTA penalty. It is designed to be unavoidable.
You are talking arrant nonsense. Once at the LTA, crystallising the whole lot immediately would be many people's smartest move.
There are too many variables to consider. Crystallising your whole pension is a dangerous move unless you need the money which most people would not unless say they were buying a holiday home or something else lumpy.{Signature removed by Forum Team - if you are not sure why we have removed your signature please contact the Forum Team}0 -
Dangerous in what way ?0
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I agree with Ed -you seem to be confusing crystallisation with withdrawal.There are too many variables to consider. Crystallising your whole pension is a dangerous move unless you need the money which most people would not unless say they were buying a holiday home or something else lumpy.
Of course, if you intend to buy something lumpy - remember that pension income is taxable too - so if you withdraw a huge chunk - you will probably be giving Mr Hammond a whole chunk of his tax back as higher rate (he says thanks BTW).I am just thinking out loud - nothing I say should be relied upon!
I do however reserve the right to be correct by accident.0 -
Yes ed. Why would you crystallize if you weren't looking to withdraw?{Signature removed by Forum Team - if you are not sure why we have removed your signature please contact the Forum Team}0
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You have lost me LOST! Ed is right.Yes ed. Why would you crystallize if you weren't looking to withdraw?
This might help -https://www.intelligentpensions.com/media/1169/lifetime-allowance-factsheet1.pdf, but then so might the replies above have helped.
The possible crystallisation event are various as defined in the link. The point at which they occur AND your "use" of % of any LTA over time and the relevant LTA limit at each crystallisation all matter, as their example outlines.
TBH I think it may be worth you getting some formal advice - so someone can walk through these things and your options with you. There are some big consequences for making the wrong choices given on the base of the numbers you will probably exceed the LTA - but you might be able to take advantage of a protection to limit that.I am just thinking out loud - nothing I say should be relied upon!
I do however reserve the right to be correct by accident.0
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