Paying £2880 into pension when retired

Dazed_and_confused

Also does this money count as income? When I submit my tax return.

Any element of the TFLS is tax exempt so it will only be taxed if you declare it on your tax return in error.

Any other income taken is taxable. The pension company will use the emergency tax code on the first payment (which means no tax is deducted on the first £1,042 from 6 April)

You declare the taxable income (and any tax deducted) on your tax return and it's taken into account in calculating your overall tax liability. Just like any other source of taxable income.

vixen1500

Dazed_and_confused wrote: »

Any element of the TFLS is tax exempt so it will only be taxed if you declare it on your tax return in error.

Any other income taken is taxable. The pension company will use the emergency tax code on the first payment (which means no tax is deducted on the first £1,042 from 6 April)

You declare the taxable income (and any tax deducted) on your tax return and it's taken into account in calculating your overall tax liability. Just like any other source of taxable income.

Could you please explain what the TFLS is?

Dazed_and_confused

Tax free lump sum

Sipowicz

Tax Free Lump Sum.

vixen1500

So the tax relief is the TFLS

The money I have paid in and withdraw is classed as income

So I have to ensure that this plus my earnings, carers allowance and interest from savings (less £1000) stays below the personal tax allowance or I will have to pay tax

Hopefully I have got that right

Dazed_and_confused

No, completely wrong sorry.

You receive tax relief when you pay into a "relief at source" pension such as the type this thread is about

So you give the pension company £2,880 and they (courtesy of HMRC) add £720 tax relief giving you a pension fund of £3,600.

For the purpose of this example we'll say that is all you ever contribute.

When you come to take money from the pension 25% can be taken as a TFLS.

The remaining 75% is taxable income.

There are several options when it comes to taking money out. You could take the 25% TFLS and leave the rest till later.

Or 25% of each payment taken out could be treated as the TFLS.

There probably other variations as well.

Dazed_and_confused

So I have to ensure that this plus my earnings, carers allowance and interest from savings (less £1000) stays below the personal tax allowance or I will have to pay tax

What does the £1000 refer to? You do know most people with income less than £16,850 (current tax year) are unable to make use of the savings nil rate of tax (aka Personal Savings Allowance).

I think you might be under a misapprehension about a few things here.

Can you post details of your total taxable income and what it will be made up of i.e. £5000 pension £6000 wages, £2000 savings interest, £300 dividends etc?

MallyGirl

I think the £1000 was from a requirement to leave £1k in the SIPP

vixen1500

Dazed_and_confused wrote: »

What does the £1000 refer to? You do know most people with income less than £16,850 (current tax year) are unable to make use of the savings nil rate of tax (aka Personal Savings Allowance).

I think you might be under a misapprehension about a few things here.

Can you post details of your total taxable income and what it will be made up of i.e. £5000 pension £6000 wages, £2000 savings interest, £300 dividends etc?

Where does the £16850 come from?

I thought everyone could get £1000 interest on savings tax free

westv

I thought it was £5,000 for incomes below £16k.