Do you think the tax free lump sum will become taxable in the near future?

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
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ognumognum Forumite
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I have read in a few replies here the advice to get your tax free lump sum sooner rather than later.

Is there a genaral feeling among advisors that the TFLS will become a taxed lump sum soon?
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  • Nothing surprises me anymore in this country.Why not we are taxed on everything else.
  • mjdh1957mjdh1957 Forumite
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    That would alter the advantages of pensions so much that many people wouldn't take out a personal plan, and as the government is currently encouraging pension plans it seems to me to be unlikely.

    But my crystal ball is a bit foggy this morning so I could be wrong.
    Retired in 2015.
    Moved to Ireland September 2017
  • dunstonhdunstonh Forumite
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    I have read in a few replies here the advice to get your tax free lump sum sooner rather than later.

    I have been on this board for years and have not seen such posts. I have seen people asking but not replies saying you should do it before its removed.
    Is there a genaral feeling among advisors that the TFLS will become a taxed lump sum soon?

    This pops up every few years and here we are 24 years after these rumours started appearing and tax free cash is still tax free. There is not even a hint in any proposals, suggestions or comment that it is going to happen. Indeed, the last two bits of pension legislation actually increased the areas you can get more out of your pension (e.g. 2006 saw tax free cash extended to protected rights and AVCs and 2010 saw flexible drawdown introduced allowing far greater amounts to be taken out).
    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.
  • gadgetmindgadgetmind Forumite
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    dunstonh wrote: »
    I have seen people asking but not replies saying you should do it before its removed.

    I've said several times that I will grab all of my PCLS as soon as I can. Ideally, I'd like them to cut a cheque on the day that I turn 55, or even better send the dosh straight to my bank account.
    There is not even a hint in any proposals, suggestions or comment that it is going to happen.

    Really?

    http://citywire.co.uk/new-model-adviser/tax-25-pensions-cash-lump-sum-says-lib-dem-think-tank/a539290
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • edited 30 October 2012 at 1:03PM
    dunstonhdunstonh Forumite
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    edited 30 October 2012 at 1:03PM
    gadgetmind wrote: »
    I've said several times that I will grab all of my PCLS as soon as I can. Ideally, I'd like them to cut a cheque on the day that I turn 55, or even better send the dosh straight to my bank account.



    Really?

    http://citywire.co.uk/new-model-adviser/tax-25-pensions-cash-lump-sum-says-lib-dem-think-tank/a539290

    You found a 2003 article about a lib dems think tank? Isnt that as about as far away from Govt as you can get. A forum post here has more weight than that ;)

    I will rephrase. THere have been no credible hints or suggestions or anything to say that tax free cash is likely to be removed and all the recent legalisation that has existed on pensions has increased the availability of tax free cash. Not reduce it.
    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.
  • gadgetmindgadgetmind Forumite
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    It's from less than a year ago and I think it construes "a hint in any proposals, suggestions or comment that it is going to happen".

    I suspect that what will probably happen is we'll see a cap that only affects "fat cats" but which is then frozen or lowered such that it affects everyone after just a few decades.

    Or it might never happen, but why take the risk?

    Note to OP: It's no longer called a "Tax Free Lump Sum" as the name was changed "Pension Commencement Lump Sum". Read into that what you will.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • dunstonhdunstonh Forumite
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    i read 03 to mean 2003. Sorry.

    It still doesnt change the situation. A lib dem think tank has no weight. The tax free cash is not under any known threat.
    Or it might never happen, but why take the risk?

    The last pension legislation making major changes took 5 years under consultation to get through a finance act which then gave a further year before starting.

    A removal of the tax free cash is not something that can happen overnight. It would require a lead in time and industry consultation as well as being part of a finance act. If you are going to get paranoid on that front then God help how you must be on things that are more likely to happen.
    Note to OP: It's no longer called a "Tax Free Lump Sum" as the name was changed "Pension Commencement Lump Sum". Read into that what you will.
    And at the same time it was renamed from tax free cash it was extended to pensions that previously had no tax free cash available from them. If your intention was to increase the tax take then why expand the availability of tax free cash?
    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.
  • jimb0jimb0 Forumite
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    These are current Lib Dem ideas from a think tank which features both Clegg and Cable as vice presidents. They are also keen on limiting ISA tax relief (one proposal suggests limiting ISA savings to a total of £15k per person as this would be 'adequate'). LD leadership are more concerned with finding a way to tax wealth in the form of land/property at the moment though.
  • gadgetmindgadgetmind Forumite
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    dunstonh wrote: »
    If you are going to get paranoid on that front then God help how you must be on things that are more likely to happen.

    I have full PCLS in my model as tax free but don't intend to take the risk of leaving it in a potentially taxable state for any longer than necessary.
    And at the same time it was renamed from tax free cash it was extended to pensions that previously had no tax free cash available from them. If your intention was to increase the tax take then why expand the availability of tax free cash?

    Yes, and tax bands used to get wider rather than narrower.

    Things change and the tax treatment of pensions seems to change every year or so.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • gadgetmindgadgetmind Forumite
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    dunstonh wrote: »
    It would require a lead in time and industry consultation as well as being part of a finance act.

    Q: How much consultation was there for the Special Annual Allowance?
    A: Absolutely zero and it was even applied retrospectively to pension contributions made before the finance act was passed.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
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