can I take 25% under old and new rules

xylophone

Are you earning interest on your savings?

You have no earned income?

http://www.moneysavingexpert.com/banking/tax-rates

For the current tax year See example 2 http://www.accountingweb.co.uk/topic/tax/new-guide-10-band-savings-income

but insert the correct personal allowance figure - for 2014-15 the basic allowance is £10,000 for a person born on or after 6 4 1948.

In the next tax year there will be a new 0% rate for savings income.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/293747/Fact_sheet_template_-_10__tax_9.pdf

You were saying that you are 61 and will become eligible for state pension in 2017.

https://forums.moneysavingexpert.com/discussion/comment/67394098#Comment_67394098


Are the three pensions you mention all DC pensions?

flecktern

jamesd wrote: »

A pension pot starts out uncrystalised, meaning that you have taken no money out. You can crystalise 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 uncrystalised 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 crystalised pot and £60,000 uncrystalised 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 uncrystalised pot, leaving you with £6,000 cash and £54,000 crystalised pot. You could not in the future take 1% or 15% or 25% tax free lump sum from the £54,000 crystalised pot, if you take a tax free lump sum it must all be done at one time from the portion that is being crystalised.

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 drawdonw is something different, the thing that today requires having a £12,000 minimum income from state pensions, deefined benefit pensions or annuities before you can start it. Flexi-acess 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.

Thanks for that its a bit clearer now, but can you answer one more question - to change my existing capped drawdown sipp
to a flexi-access drawdown, does this have to be done before the new rules come into effect in april or could I do it after that date?

mgdavid

flecktern wrote: »

Thanks for that its a bit clearer now, but can you answer one more question - to change my existing capped drawdown sipp
to a flexi-access drawdown, does this have to be done before the new rules come into effect in april or could I do it after that date?

You can apply for Flexible DD now IF you have £12k of guaranteed income from other sources (DB pensions, annuities ).
If you don't have £12k of other income you have to wait until after 6th April when flexi-drawdown becomes available to everyone.

flecktern

mgdavid wrote: »

You can apply for Flexible DD now IF you have £12k of guaranteed income from other sources (DB pensions, annuities etc).
If you don't have £12k of other income you have to wait until after 6th April when flexi-drawdown becomes available to everyone.

does salary and/or isa count as other income?

greenglide

No - it needs to be "guaranteed" income - DB pension or annuity.

flecktern

greenglide wrote: »

No - it needs to be "guaranteed" income - DB pension or annuity.

thank you so much for making things clearer