What to do with cash?

Ganga

Hello jamesd,regarding the info on starting another pension,can i start another pension with the £7,500 gain 20% from tax ( £1500.0 ) and then close it and draw the total amount out.
If this is possible would the £9000 be classed as income and taxed , i will not be earning any income exept my tax free lump from my pension this year 2016/2017

bigadaj

Ganga wrote: »

Hello jamesd,regarding the info on starting another pension,can i start another pension with the £7,500 gain 20% from tax ( £1500.0 ) and then close it and draw the total amount out.
If this is possible would the £9000 be classed as income and taxed , i will not be earning any income exept my tax free lump from my pension this year 2016/2017

Yes so long as you have earned that amount gross in that tax year, taking the amount of money out is the same as any pension, 25% tax free and the rest subject to tax.

greenglide

If this is possible would the £9000 be classed as income and taxed , i will not be earning any income exept my tax free lump from my pension this year 2016/2017

So the only income you have is pension income / tax free lump sum?

Only earned income (from employment) counts for pensions, if you have none you are limited to the £3,600 gross / £2,880 net for non earners.

Ganga

Thanks for replies,so if i start a new pension with £2880.0 grossed up to £3600.0 can i then close it and draw the whole amount giving me £720.0 for nothing? and if so can you do it more than once per tax year?

greenglide

You can do it "immediately" as soon as the pension provider has received the tax refund from DWP and providing you meet any requirement of the provider for minimum period, charges for closing account etc.

You can only do it once per year if you have used all your allowance (the £3,600 / £2,880).

Ganga

Thanks for info have had to pop out so have just read replies,will speak to lady from Pru when she comes to see me next week.

Ganga

greenglide

So where does "the lady from the Pru" fit into all this?

You wouldnt use the Pru for this type of transaction. Remember the pension contributions of £3,600 / £2,880 only leaves £720 "profit" split between you and the provider.

dunstonh

Ganga wrote: »

Thanks for info have had to pop out so have just read replies,will speak to lady from Pru when she comes to see me next week.

Ganga

What has Pru got to do with it? I would expect Pru to prefund the tax relief. Although this transaction isnt one you would expect to use Pru for.

Ganga

My current pension provider is the Pru and she is coming round with the forms for me to complete for my 25% tax free lump,i pressumed that the Pru would be my first contact to put this in place.Why would the pension provider want to take 50% of the tax uplift on a pension?

greenglide

I didnt mean they would want half but there would be costs from them.

Normally these things would be via one of the low cost DIY platforms, anything else would tend to be totally uneconomic

Not the sort of business Pru would be into..