Tax Free Pension Release

mamaswoop

I have just taken a "Tax Free Cash Release" from a Personal Pension and have been deducted nearly £1000 from a £5000 release on my pension !!!...... I don't understand this at all. I've contacted my private pension provider about this Tax and have today, received a letter telling me all the rubbish that I already knew about, and nothing at all about why I have paid this huge amount of Tax for a so called "Tax Free Cash Release" Any suggestions would be greatly appreciated.... :mad:

coyrls

http://www.moneysavingexpert.com/savings/pension-liberation?_ga=1.180271078.333818627.1394558907

hyubh

mamaswoop wrote: »

I have just taken a "Tax Free Cash Release"

What's that? At best it sounds like a marketing term.

from a Personal Pension

Did you transfer it from one provider to another take the 'tax free cash release', and if so, what was the new provider called? Also, how old are you? Under 55 and you've just done something illegal; over 55 and you need to watch out for the legal limits and other restrictions.

and have been deducted nearly £1000 from a £5000 release on my pension !!!

As a charge by the provider, or as tax? Doesn't sound big enough to be the tax charge on an unauthorised payment (see https://www.gov.uk/pension-schemes-and-unauthorised-payments).

I've contacted my private pension provider about this Tax

Are you sure it was tax? To be honest, if it was, that's probably good news, because it means you won't be liable for an actual tax bill from the remainder.

have today, received a letter telling me all the rubbish that I already knew about

What in particular did you already know?

for a so called "Tax Free Cash Release"

'So-called' indeed by the sounds of it I'm afraid!

dunstonh

I have just taken a "Tax Free Cash Release" from a Personal Pension and have been deducted nearly £1000 from a £5000 release on my pension

There is no such thing as a tax free release. The maximum tax free cash (without any transitional relief) is 25% The rest is taxable.

I've contacted my private pension provider about this Tax and have today, received a letter telling me all the rubbish that I already knew about, and nothing at all about why I have paid this huge amount of Tax for a so called "Tax Free Cash Release"

All that rubbish is factual and correct information. Unlike the "tax free cash release" which is a term that does not exist.

If you are able to access 100% of the pension value then 25% is tax free. 75% is taxable as month one earnings.

Aegis

Honestly, it sounds like you've accessed £5,000 of taxable income with basic rate deducted at source. That would result in exactly the scenario described. Best bet is to speak to your provider and ask how the payment was made.

Did you make it clear that you were looking to draw from your Pension Commencement Lump Sum entitlement rather than the main pension (also, do you have remaining PCLS entitlement)? Or were you drawing £5,000 from your crystallised rights but expecting to pay no tax because you are under the personal allowance for income?

jamesd

"Tax Free Cash Release" isn't a term that exists in UK pensions, except being the sort of wording used by pension scammers. At the moment we don't know enough about your pension and what was done to say much about your situation. Are you 55 years old yet? Did you have to move the pension to get the money? What is the name of the firm the pension is with and the one doing the cash release? How was and is the money invested inside the pension? Had you previously taken a 25% tax free lump sum from the pension pot?