Pension lump sum tax?

RedAlert260599 · 15 February 2010 at 3:40PM

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?

McKneff · 15 February 2010 at 3:51PM

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

dunstonh · 15 February 2010 at 4:18PM

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.

MrChips · 15 February 2010 at 5:06PM

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.

EdInvestor · 15 February 2010 at 7:28PM

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.