Tax percentage on drawdown?

dllive

Hi all,
Ive heard you can get a percentage of your pension in one tax-free lump sum, and then the remainder can be got at as taxable income. What percentage would this be taxed at? 20%?
Thanks

edinburgher

You can typically take up to 25% of your pension as tax free.

I believe that your tax rate will depend how much you are drawing down and that it's taxed at source when you draw down the funds?

Triumph13

The first 25% you can take as a tax free lump sum. The remainder you take as an income via either drawdown or buying an annuity and this would be taxed just like any other income

dllive

Ah I see - so if I draw £32k pa (or whatever basic tax will be) then Ill pay 20%, and if I draw over £32k pa then Ill pay 40%.

Linton

dllive wrote: »

Ah I see - so if I draw £32k pa (or whatever basic tax will be) then Ill pay 20%, and if I draw over £32k pa then Ill pay 40%.

Not over 32K, rather over 32K + Your tax allowance if you have no other income.

bigadaj

dllive wrote: »

Ah I see - so if I draw £32k pa (or whatever basic tax will be) then Ill pay 20%, and if I draw over £32k pa then Ill pay 40%.

Yes, but depending on other income you also have your personal allowance. So £10k free, minus whatever income you have, which could include the state pension if you are of an age to draw it.

System

dllive wrote: »

Hi all,
Ive heard you can get a percentage of your pension in one tax-free lump sum, and then the remainder can be got at as taxable income. What percentage would this be taxed at? 20%?
Thanks

You are mixing up apples and pears there. You can take up to 25% of the total pot as a tax-free lump sum, but you cannot normally take "the remainder", only the income produced by the remainder.