Lifting full pot advice

che1959_2

Hi all, sorry to throw more pension questions out there but I am looking for some advice.

Both my parents have small pension pots with Standard life, which as they have now turned 55 have decided they want to access. They are living in a council property have been tenants for over 30 years so are planning to use the right to buy which ends in Scotland next year.

Each pot is around £20k and they currently earn around £15k a year, so I believe that after taking their personal allowances in to the calculation they will be taxed on around £25k so in this will stay in the 20% band. Would I be wrong in this thinking?

Now with this in mind if the pot is £20k, £5k would be tax free and the remaining £15k would be taxed at 20 % equaling around £3k tax, again would this be a close figure, or is my thinking way off?

Sorry a few more questions, can they contact Standard life and ask for the pot to be transferred to their bank accounts or would they need to go through an IFA as they seem to think in the past they have been told this. If they can do it themselves are there any further charges or payments they would need to consider ?

Sorry this has been as many questions and would greatly appreciate any help you can give

jamesd

Your thinking about the final income tax charges is correct. However initially they will be charged income tax as if they were going to receive around £15,000 a month of taxable income and would get 1/12th of their personal allowance and basic rate band, so some would be taxed at higher rate. HMRC has a form to submit to reclaim the extra tax once the payment has been made.

There is no need for financial advice for these transactions and it is now unlikely that they would be told that it is required. If that happened the alternative would be to transfer the money to another place first.

AlanP_2

I can appreciate the desire to cash in and buy their property, and it may be the best thing to do but what will they live on when they retire?

Are there any other pensions or will it be State Pension only?

xylophone

http://www.standardlife.co.uk/c1/news-and-blog/moneyplus/tax-planning-2/what-is-the-emergency-tax-code/

http://www.standardlife.co.uk/c1/news-and-blog/moneyplus/investing-2/april-6-the-pension-changes-are-here/




https://www.gov.uk/new-state-pension/overview

Your parents may wish to get a statement.

https://www.gov.uk/government/news/millions-more-offered-free-pension-statement

che1959_2

jamesd wrote: »

Your thinking about the final income tax charges is correct. However initially they will be charged income tax as if they were going to receive around £15,000 a month of taxable income and would get 1/12th of their personal allowance and basic rate band, so some would be taxed at higher rate. HMRC has a form to submit to reclaim the extra tax once the payment has been made.

There is no need for financial advice for these transactions and it is now unlikely that they would be told that it is required. If that happened the alternative would be to transfer the money to another place first.

Thank you very much for the advice

che1959_2

AlanP wrote: »

I can appreciate the desire to cash in and buy their property, and it may be the best thing to do but what will they live on when they retire?

Are there any other pensions or will it be State Pension only?

There will be a small company pension and the state pension, by buying the house they will be saving themselves £300 to £350 a month on rent as they will be able to buy the house out right. I know that they may be able to get Housing Benefit however as we have seen lately there is no guarantee that they will, as even small pensions will have an effect. so will at least have a home and an asset.

xylophone, thanks for the advice as will certainly get them to look at this.

Thanks again for all the advice