Pension taxable even if not earning?

Birdyuk

With the new rules, if I take less than £10500 pa from my pension fund each year, as it's below the tax paying threshold and I have no other income, is the pension still taxable at 25% under the new rules?

kidmugsy

Birdyuk wrote: »

With the new rules, if I take less than £10500 pa from my pension fund each year, as it's below the tax paying threshold and I have no other income, is the pension still taxable at 25% under the new rules?

No. It's taxed as income in the normal way. So if you have no other income (not even a wee bit of interest from a bank account?) the first £10,600 p.a. is free of tax; the next £1 pays 20%.

The only complication is that it may be that the first payment you receive will have had tax subtracted, which you will have to reclaim from HMRC. See lots of recent discussion on this issue in this forum.

Birdyuk

Great, I may be working part time with a salary of about £5000 pa, so if I keep my pension down to about the same I should pay no tax.

xylophone

If the OP's pension and earned income keeps him at or below his tax free allowance, a "wee bit of interest" would be tax free....

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

atush

If you are earning 5K, you can take 5,600 tax free.

But dont forget you get 25% of your fund tax free which you c an take use, save or invest in a S&S isa.

You could even put 5K per year into a new pension if you desire?