Tax free lump sums plus recycling

jamesd

Since you're not planning to put a pension commencement lump sum into a pension you have no possible recycling issue. Nor do I see scope for HMRC confusion about it because the timing tends to suggest that no recycling is happening. It's completely normal for people approaching retirement or redundancy to pay more money into pensions. That's just a result of changed circumstances. People in some cases have also been greatly increasing contributions due to changes in tax rates and fear of a possible end to the 40% tax relief on contributions, both also fine reasons for paying in more.

What that AVC does do is start to establish a pattern of higher pension contributions that makes it less likely that future higher contributions would be regarded as recycling if they happened around the time of taking a lump sum.

You can take 25% as a lump sum. Possibly more if your work scheme is governed by some older rules.

I suggest you have a read of examples that aren't recycling and examples that might be recycling.