SP deferral question

STILTON

Sorry if posted before somewhere.

I have deferred my SP and thinking of drawing it either this tax year.

Question, if I draw lump sum this tax year ( after 14 months deferred ) and my income from other non work sources this tax year is £200 short of the 40% threshold. Will I only being liable to 20% tax on the lump sum which would put me otherwise over the 40%.

Reading the yougov site it says that the lump sum drawn is taxed at whatever ones normal rate is. Therefore as I never went over the 40% I should only pay the 20%. Am I reading this right?

Thanks in advance.

greenglide

If you only pay basic rate tax then that is what you pay on the lump sum.

Unlike all other sources of income this one does not push you into higher rates. A strange concept.

Even so, I think it is still generally a better deal to take the extra pension but there can be exceptions, impaired life expectation etc.

JuneAB

STILTON wrote: »

Sorry if posted before somewhere.

I have deferred my SP and thinking of drawing it either this tax year.

Question, if I draw lump sum this tax year ( after 14 months deferred ) and my income from other non work sources this tax year is £200 short of the 40% threshold. Will I only being liable to 20% tax on the lump sum which would put me otherwise over the 40%.

Reading the yougov site it says that the lump sum drawn is taxed at whatever ones normal rate is. Therefore as I never went over the 40% I should only pay the 20%. Am I reading this right?

Thanks in advance.

If you are in the 20% tax bracket then 20% tax it is. Although if you are doing this your state pension will start being paid to you and as it is taxable that may push you into 40%, especially as you are only £200 under.

I suppose if you time it right and the pension payments come under the next tax year you could be ok.