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    • Ganga
    • By Ganga 10th Jul 17, 11:37 AM
    • 876Posts
    • 433Thanks
    Ganga
    Taxation on pension
    • #1
    • 10th Jul 17, 11:37 AM
    Taxation on pension 10th Jul 17 at 11:37 AM
    Can any of the people on this forum answer a question for me?

    I have not drawn my state pension yet ( 65 in july 2015 )
    Due to some possible health issues i was contemplating taking the lump sum after my 67 th birthday.
    Since retiring end of March 2016 i have not earned any income,living of my wifes state pension and her private pension.
    Now i believe if not earning i can take the lump sum tax free?
    If i do this do they include this figure in my tax year as earnings as i also have a very small private pension ( £7000 approx. ) that i would also like to draw as it is doing nothing,infact has dropped slightly.

    Thanks in anticipation Ganga
    ITS NOT EASY TO GET EVERYTHING WRONG ,I HAVE TO WORK HARD TO DO IT!
Page 1
    • xylophone
    • By xylophone 10th Jul 17, 12:50 PM
    • 23,695 Posts
    • 13,814 Thanks
    xylophone
    • #2
    • 10th Jul 17, 12:50 PM
    • #2
    • 10th Jul 17, 12:50 PM
    See http://www.litrg.org.uk/tax-guides/pensioners-and-tax/what-state-pension-deferral
    • molerat
    • By molerat 10th Jul 17, 12:55 PM
    • 17,487 Posts
    • 11,724 Thanks
    molerat
    • #3
    • 10th Jul 17, 12:55 PM
    • #3
    • 10th Jul 17, 12:55 PM
    The lump sum will not affect your tax liability for the year in which it is drawn, it will not be totalled into your income. It will be taxed at the rate due on the total of all your other income. If all your other income is below your tax allowance then no tax will be due. If you are 1p into the 20% band then it will be taxed at 20%. Don't forget that when you take the deferred lump sum you will also start to take the pension so that needs to figure into your calculations. It is probably better to take it at the end of a tax year so there is little state pension to add to your total income for the year.
    Last edited by molerat; 10-07-2017 at 12:57 PM.
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    • Ganga
    • By Ganga 10th Jul 17, 4:13 PM
    • 876 Posts
    • 433 Thanks
    Ganga
    • #4
    • 10th Jul 17, 4:13 PM
    • #4
    • 10th Jul 17, 4:13 PM
    The lump sum will not affect your tax liability for the year in which it is drawn, it will not be totalled into your income. It will be taxed at the rate due on the total of all your other income. If all your other income is below your tax allowance then no tax will be due. If you are 1p into the 20% band then it will be taxed at 20%. Don't forget that when you take the deferred lump sum you will also start to take the pension so that needs to figure into your calculations. It is probably better to take it at the end of a tax year so there is little state pension to add to your total income for the year.
    Originally posted by molerat
    Thanks for the info,can i not take the lump sum and then if i want,defer taking the pension for another 12 months or longer?
    ITS NOT EASY TO GET EVERYTHING WRONG ,I HAVE TO WORK HARD TO DO IT!
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