pension recycle clarification

jamesd

rangersfc wrote: »

I have taken my defined benefit pension as i retire in the same month as payment. It has not been taken for the sole reason of recycle, if it makes a difference.

It can make a big difference because unlimited recycling is permitted if at the "relevant time" the purpose was not recycling.

The HMRC guidance says explicitly that a person who takes a lump sum then after taking it decides to recycle isn't caught by the rules.

So for example, if a scheme always pays a fixed lump sum and the pension is taken at normal retirement age it'll be impractical for HMRC to prove recycling beyond the rules because the lump sum was taken just as a consequence of taking the pension, not for any recycling purpose.

Taking DB and recycling DB or any other income is fine, so is borrowing and repaying later from DB income because it's income. While borrowing and repaying from the lump sum wouldn't be fine, nor would taking from your savings and topping them back up from the lump sum. So you could use a credit card cash advance or personal loan and repay out of income if you wanted to, perhaps investing the lump sum in P2P or VCT to prove it wasn't used.

[Deleted User]

jamesd,
Thank you for the replies and information. Very helpful.
Much appreciated,
Bill

gnash101

Have an enjoyable retirement Billy

DC

[Deleted User]

rangersfc wrote: »

AnotherJoe,
Thanks for reply.I have my up to date numbers re unused tax allowance.(£60k, including carry forward). Will I be limited to contribute to the amount of my salary? (if I can contribute). I have joined the new scheme to qualify for the death in service benefit until I retire on the 31st.
Thanks, Bill

Is this Net or the 'Grossed Up Amount'? I'm in a similar position as yourself (with regard to salary and age), and only realised when I did a sanity check that I should be using the grossed up amounts, not what had actually been paid in.

[Deleted User]

gnash101,
Bottoms up!

Billy

[Deleted User]

Sleazy,
All I know is the figure was provided by pension admin. I will be
consulting with them again, before I make any decisions re amounts.
Bill

[Deleted User]

jamesd,
I have sent private message. Regards
Bill