CTC, PC and Pension Release

Tabitha_T

Hi, I have been putting off buying a new car but as mine is now defunct I need to sort this pronto. So, I have a £50k pension that I can access as I am over 55. My OH is on Guarantee element of PC and I receive CTC. I know that £10k is ceiling for PC 'savings' so if I took, say, £15k to buy a new car, would only £5k be deducted from PC amount, and how would my CTC be affected? Is there a ceiling on that too, even if in receipt of PC? Also, if all the money is being used to buy a car, so I don't have any left in my pocket, so to speak, would that £5k still count against us with the PC office?
Thank you in advance for any help, Tabs

cloudydays

You'll need to declare the pension payout as pension credit is a joint claim. They will decide if it is deprivation of capital if you spend the payout on a new car.

xylophone

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/417473/pension-flexibilities-dwp-benefits.pdf

Tabitha_T

Thanks for your response, yes, I understand what you are saying in regards to PC. Do you know about the CTC ceilings on savings/income being drawn? I don't know how they view pension drawdown, and they certainly won't be drawn on the phone. I'm just a bit concerned any pension drawdown would be viewed as income, even though it's going to be spent on a car. (Although I was told that if one is in receipt of guarantee element of PC, that there are no penalties or savings ceiling in respect of CTC). Tabs

cloudydays

Regular payments from your pension are classed as income for both PC and CTC.

Darksparkle

If you are on PC you get full CTC.

teddysmum

Have you compared the loss of future pension pay outs, by taking a lump sum, to the cost of buying a car on credit ?


Also,as the 'pot' is £50000,25% of which is just £12500,would there not be tax on £15000-£12500( ie £2500), if you don't have unused tax allowance ?

sheramber

You really need to think carefully before you do anything.

Any lump sum you withdraw from your pension will count as capital so the full £15000 would count and a deduction of £1 for every £500 or part of £500 made.

If you spend any of the lump sum it will be assessed as to whether that is regarded as deprivation of capital. If it is decided that it is deprivation of capital then it will be considered you still have that money.

but, If you’re entitled to a private or workplace pension, the amount you’d expect to get is calculated as income from the date you were able to get it, if you had claimed it.

So, have you told Pension Credit about this pension now being available and how it affects your OH 's claim even if you don't take it? Will you still be entitled to pension credit?

You need to check this out.

for CTC
http://revenuebenefits.org.uk/tax-credits/guidance/how-do-tax-credits-work/what-is-income/pension-income/

The tax-free element of pension withdrawal is ignored as income for tax credit purposes but any amount over that limit should be declared as pension income in the usual way, as with interest on savings and investments. Both are classed as ‘other income’ and the total amount of ‘other income’ (which also includes foreign, property and notional income) which is over £300 is taken into account in assessing income for tax credit purposes.

The tax free element is 25% of the total so 25% x £15000 = £12500.