Lump Sum Question

CathA

I understand about the 25% lump sum you can take tax free, and about 25% of any pension withdrawals being tax free but what if you want to take a different amount?

For example, if you had £100,000 in a pension and £25,000 could be taken as a lump sum tax free, what would happen if you only wanted/needed £15,000? What would happen with regards the remaining £10,000 (of the £25,00 tax free lump sum),could that be taken at a later date still tax free?

Thanks all.

kidmugsy

CathA wrote: »

I understand about the 25% lump sum you can take tax free, and about 25% of any pension withdrawals being tax free but what if you want to take a different amount?

For example, if you had £100,000 in a pension and £25,000 could be taken as a lump sum tax free, what would happen if you only wanted/needed £15,000? What would happen with regards the remaining £10,000 (of the £25,00 tax free lump sum),could that be taken at a later date still tax free?

Your pension would now consist of two "arrangements". The crystallised bit would contain £45k, which would be tax-exposed as you drew it.

The uncrystallised bit would contain £40k. That would rise or fall depending on how well your investments did. When you crystallise it, 25% of it could be taken tax-free.

Unless, of course, Mr Balls has a notion to change all that.

dunstonh

I understand about the 25% lump sum you can take tax free, and about 25% of any pension withdrawals being tax free but what if you want to take a different amount?

Not quite correct. At least not how you have written it.

It is EITHER 25% lump sum or 25% of the income that is tax free. Not both.

For example, if you had £100,000 in a pension and £25,000 could be taken as a lump sum tax free, what would happen if you only wanted/needed £15,000? What would happen with regards the remaining £10,000 (of the £25,00 tax free lump sum),could that be taken at a later date still tax free?

As kidsmugsy says. It is important not to crystallise the lot when taking a lower amount.

CathA

dunstonh wrote: »

Not quite correct. At least not how you have written it.

It is EITHER 25% lump sum or 25% of the income that is tax free. Not both.

Sorry, I've not written it clearly.

I understand that it is either/or. Just wondered if you were able to split the tax free lump sum into separate withdrawals.



As kidsmugsy says. It is important not to crystallise the lot when taking a lower amount.

Thank you.

mgdavid

BizBroacast wrote: »

Hello,

I am a financial journalist looking for case studies on people who HAVE or WILL cashed/cash in their pension pot. The general sentiment on different forum streams seems to be it is a bad idea.

If you have taken your pension pot then please private message me to discuss further. We are looking to understand your reasons why you took and whether you plan to reinvest the money in a different financial product.

Thanks

reported.
This same 'contribution' is spammed across multiple threads.