Lump sum question

Bunker

If you take a 25% lump sum at 55, but leave the rest, does the 10k annual contribution limit apply or can you contribute more(up to the 40k limit currently) into a 'new' pot that will have its own 25% lump sum available later?

Also is the pension contribution limit before grossing up, when grossed up to basic rate, or grossed up to higher rate tax?ie how much net contribution can you make before you exceed the 40k limit?

TIA

Linton

The pension contribution limit reduction to £10K across all your pensions to be implemented from April 2015 will only apply if you take more than the 25% TFLS out of a pension. Also you will be able to cash in "small pots" without a reduction in the £40K limit.

The limit is based on gross payments into a pension, including employers contribution

Bunker

Linton wrote: »

The pension contribution limit reduction to £10K to be implemented from April 2015 will only apply if you take more than the 25% TFLS out of a pension. Also you will be able to cash in "small pots" without a reduction in the £40K limit.

The limit is based on gross payments into a pension, including employers contribution

Does that mean that a higher rate tax payer 'pays in' £24k 'cash' and grossed up its at the limit, or is it £32k 'cash' grossed up at basic rate?

Linton

Bunker wrote: »

Does that mean that a higher rate tax payer 'pays in' £24k 'cash' and grossed up its at the limit, or is it £32k 'cash' grossed up at basic rate?

For a £40K pension contribution you would always pay in £32K net. However depending on your income you may get extra HRT relief as a tax refund outside the pension.

Bunker

thanks for the info.