Tax on a Pension

pothole50

I am thinking of taking my pension early at 54 instead of 60 the ammount I would be entitled to is £5895 pa if I left it till 60 it would be £8000, will I be paying tax on the £5895 or is it the same as when working my tax code being 603L earning £6030 before taxed.
Thanks

Tony

molerat

Yes, you are entitled to earn 6035 before tax, be it from a job or pension. £5895 is not enough to live on so where is the rest coming from ? If you are going to carry on working then your pension will be taxed accordingly.

McKneff

You havent said whether you are working now. If you are working and earning over £6030 per annum then you will pay 20% tax on the pension you get from your pension pot.

Hopefully Dunstonh who is a pension whizz will be along soon to explain much better than i can

pothole50

No I am not working, I was made redundant my trade is a Toolmaker I was down the Job centre today did a search and it found seven toolmaking jobs only in the UK!!!
I am not sure what the government guidelines are regarding what is enough to live on but the JSA pay £64.50 a week £3354 pa, they say thats enough to live on so I should be quiet comfortable on £5895 I suppose it all depends on lifestyle.

pothole

McKneff

but at 54 you are certainly not on the scrapheap, you dont have to be a toolmaker. There are a multitude of things you can do workwise that are worthwhile. You'll be bored to death in a few weeks. Do you have a family, mortgage, debts. Will you be looking for another job. At 54 you should be having a whale of a time. I am near to retirement in October but i cant imagine being at home 24/7. See someone at the job centre, even think about retraining, age is no barrier these days.
As far as i know you will pay tax because JSA will be added to your pension for tax purposes so you will pay tax on anything over £6030 per year.

Good luck, whatever you decide.