My Pension strategy - please blow holes in it!

kidmugsy

kidmugsy wrote: »

Request to other readers: have I got the Recycling Rules right? Is it OK to withdraw a £7,500 Tax-Free Lump Sum each tax year without any constraint thereby being put onto pension contributions?

I have checked myself. The rule is that to avoid constraints on recycling a "Pension Commencement Lump Sum" you mustn't take PCLSs exceeding £7500 in any twelve month period. I found this source handy.
https://adviser.royallondon.com/technical-central/pensions/contributions-and-tax-relief/recycling-of-tax-free-cash/

NorthernGeezer_2

This is getting confusing.............................
I don't understand the £7500 amount, why cant you withdraw up to you personal tax allowance, whatever that might be?

AlanP_2

NorthernGeezer wrote: »

This is getting confusing.............................
I don't understand the £7500 amount, why cant you withdraw up to you personal tax allowance, whatever that might be?

The £7500 is the limit for Tax Free Lump Sum(s) in a 12 month period WHEN you are still paying in to a pension.

HMRC don't want to give you tax relief on pension contributions which you withdraw 25% of tax free and pay straight back in to get another piece of tax relief and so on.

Lump Sum Recycling is a no, no in their book (sensibly so although it would be nice if I could).

westv

AlanP wrote: »

Lump Sum Recycling is a no, no in their book (sensibly so although it would be nice if I could).

Although there's nothing to stop you putting in a spouses pension.

AlanP_2

westv wrote: »

Although there's nothing to stop you putting in a spouses pension.

True, I'd need a 2nd spouse to do that as current one is up to AA :beer:

Terron

That £7,500 limit had me worried since I plan to exceed that this calandar year and the next. I also plan to increase my contributions by a large proportion - from zero which is the next check. I plan to start withdrawing money from my property company through a directors pension. However it looks like I should pass the next check. My contributions should be under 30% of my withdrawal.