New Pension Rules- Opportunity for tax avoidance for better of savers

jamesd

Clifford_Pope wrote: »

You have to have earned income of at least that amount in order to get tax relief on pension contributions.

Yes. Since the reason for the restriction is to stop people who are earning more than £10,000 from getting this gain I assumed that the income is there.

ROY47

Can someone explain in simple terms please

If I retired next week with an annual pension of lets say £18000

would i pay tax on it ?

Your_Hero

ROY47 wrote: »

Can someone explain in simple terms please

If I retired next week with an annual pension of lets say £18000

would i pay tax on it ?

Of course you would. It's the same as someone earning £18,000 a year in income from employment.

ROY47

Thanks for that

blackfritz

Assuming this was your only income, you would be entitled to a tax free allowance of 10k a year, over this you would pay basic rate -20% tax on the excess of 8k.

RobStaffs

Would interest from cash ISA's and Stocks and Shares ISA's be considered as part of your tax free income for the year? Appreciate it isn't now but is it different on retirement?

RobStaffs

dunstonh wrote: »

Paul Lewis is not known for actually getting the point. His aiming tends to be way off the mark nowadays.

I really enjoy his work but he tends to be corrected a lot via his twitter ramblings.:):)

jem16

RobStaffs wrote: »

Would interest from cash ISA's and Stocks and Shares ISA's be considered as part of your tax free income for the year? Appreciate it isn't now but is it different on retirement?

It's just the same in retirement.

brewerdave

ROY47 wrote: »

Can someone explain in simple terms please

If I retired next week with an annual pension of lets say £18000

would i pay tax on it ?

...but you don't pay any NI out of your pension, so you get ~ 10% more net income.

jamesd

Income from ISAs, Premium Bonds and Venture Capital Trusts is not taxable income now or in retirement. There is no need to tell HMRC about this income.