Pension lump sum tax?

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RedAlert260599
RedAlert260599 Posts: 2 Newbie
in Pensions, annuities & retirement planning
Can anybody advise me please?
I'm 52 years old and have been offered the opportunity to take my pension from a previous employment - as long as I do it before April 2010, after which I can't take it till I'm 55.
I don't want to take it - I'm already in the 40% tax bracket so my monthly pension would be taxed at 40% too. However, I'm worried that the government might be looking to tax the lump sum I'd receive if I don't take it now.
I was wondering if anybody has heard of plans by the government to tax pension lump sums?

Comments

  • McKneff
    McKneff Posts: 38,831 Forumite
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    No one can predict what the government will do in the next five years.

    We can only say that a lump sum from a pension is not taxable at the moment.

    Dunstonh and/or edinvestor will be along probably, they know far more about this sort of thing than i do, i just didnt want to read and rund.
    Good luck
    make the most of it, we are only here for the weekend.
    and we will never, ever return.
  • dunstonh
    dunstonh Posts: 116,541 Forumite
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    However, I'm worried that the government might be looking to tax the lump sum I'd receive if I don't take it now.
    There is nothing to suggest or even hint that the Govt will be removing the 25% TFC any time in the future.

    Indeed, the ability to take the 25% TFC is probably more beneficial to the Govt in the short term as it can be used for reducing debts or capital expenditure.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • MrChips
    MrChips Posts: 1,010 Forumite
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    Agreed, no hint of any plans to remove this. In fact, the 25% allowance which came in as part of the "tax simplification" changes in 2006, is actually more generous (in most cases) than the arrangements which existed previously.
    If I had a pound for every time I didn't play the lottery...
  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
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    There are some small moves on high earners at the moment related to pensions, but they only seem to apply to people on more than £100-150k p.a.So if you are below that level I wouldn't worry.
    Trying to keep it simple...;)
  • Ian_W
    Ian_W Posts: 3,778 Forumite
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    MP's, Ministers and senior Civil Servants pensions, like everyone else's, allow 25% TFC.

    Turkeys and Christmas, anyone? ;)
  • RedAlert260599
    RedAlert260599 Posts: 2 Newbie
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    Thanks for the replies, most appreciated and my mind is now settled on this matter. :T
  • Grumpy_Old_Duffer
    Grumpy_Old_Duffer Posts: 689 Forumite
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    RedAlert260599 wrote: »
    ..... my mind is now settled on this matter.

    Cut-'n-run??:D
    It has taken about 4,500,000,000 (4.5 billion) years for the Earth to form as it is now .........
    and it'll only take about another 100 years for mankind to really **** it up!!!!
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