can I take 25% under old and new rules

flecktern

last year I took 25% of my pension pot tax free, with the changes this April can I take another 25% tax free or am I stuck under the old rules as I have already taken a drawdown.?

jem16

flecktern wrote: »

last year I took 25% of my pension pot tax free, with the changes this April can I take another 25% tax free or am I stuck under the old rules as I have already taken a drawdown.?

You can only ever take 25% tax-free no matter which rules, old or new.

If you have made further contributions then you could take 25% of this new part.

flecktern

does it matter if it is crystallised or uncrystallised?

jem16

flecktern wrote: »

does it matter if it is crystallised or uncrystallised?

If you took the full 25% of your pot, then all the funds would be crystallised as that's what crystallising a pension means. It doesn't matter whether you took an income or not.

hayleydaley

So I cannot take 25% now and then another 25% in April.

Linton

hayleydaley wrote: »

So I cannot take 25% now and then another 25% in April.

Correct. Well you can but you will be taxed on the 2nd 25%.

jem16

Linton wrote: »

Correct. Well you can but you will be taxed on the 2nd 25%.

Unless it's within your tax-free personal allowance.

flecktern

I took 25% last year at age of 55 to pay off mortgage, which meant I had to leave co. pension and get a SIPP which is a capped drawdown. Will I be able if I want to change to a flexible drawdown after April or will I be held in a Capped situation taken out in Dec 2013.

hayleydaley

Don't have a personal tax allowance as I have retired from work, not claiming any pensions or benefits. Does this make any difference.

Annisele

hayleydaley wrote: »

Don't have a personal tax allowance as I have retired from work, not claiming any pensions or benefits. Does this make any difference.

You do have a personal tax allowance, because everybody does (although for a very few people in special circumstances it is 0). You might not be earning enough for your tax allowance to make any difference to you, but you do have one. For most people the allowance is £10,000, but there are lots of reasons to have different ones.

So, if you take more than your personal allowance out of your pension, you'll be taxed on anything above that allowance. If you don't, you won't.

jamesd

A pension pot starts out uncrystallised, meaning that you have taken no money out. You can crystallise any portion of any pot one time and at that time you can take out up to 25% as a tax free lump sum. The rest of that pot and all other pots remain uncrystallised until you take something out of them.

So you could say take a 25% tax free lump sum from £40,000 of a £100,000 pot and you would have £10,000 cash, £30,000 crystallised pot and £60,000 uncrystallised pot. You could not then take another tax free lump sum from the £30,000 part but you could take up to 25% from any portion of the £60,000. You could take a 10% tax free lump sum from the whole £60,000 uncrystallised pot, leaving you with £6,000 cash and £54,000 crystallised pot. You could not in the future take 1% or 15% or 25% tax free lump sum from the £54,000 crystallised pot, if you take a tax free lump sum it must all be done at one time from the portion that is being crystallised.

You can't change to flexible drawdown after 6 April 2015. You can change to flexi-access drawdown that allows you to take any amount out whenever you like. Flexible drawdown is something different, the thing that today requires having a £12,000 minimum income from state pensions, defined benefit pensions or annuities before you can start it. Flexi-access drawdown doesn't have that restriction so it makes flexible drawdown irrelevant for those not in it already.

You are in capped income drawdown now so each tax year you can take up to the GAD limit amount of income in capped drawdown. Your pension provider should have told you your GAD limit amount when you entered capped drawdown, it would probably have been about 6%.

If you have no taxable income you can take up to the personal allowance out of a pension pot in capped or flex-access drawdown without having any income tax to pay. The pension provider might deduct it anyway if they don't yet have a tax code from HMRC, if that happens you get to reclaim from HMRC.