25% Tax Free

jjjacqueline

OK so, thanks for taking the time for me as I don't fully understand, I only have two options, take the pension full or take 25% cash free so the cash free seemed better?

Dazed_and_confused

my pension will not be more than the personal allowance anyway, I do have savings and intended saving the cash lump sums, sorry just one more quick question, if I invested all of the money and earned over £1000 in interest would this be taxable, my annual income will be less than £8000, so can I earn up to £4500 in interest, or does it not work like that?

My pension would be only income and £64 carers allowance, I had to give up work to look after my parents.

You aren't going to be able to make use of the savings nil rate of tax (otherwise known as the Personal Savings Allowance) because you have insufficient income, it simply doesn't apply to those on low incomes.

Assuming you haven't applied for Marriage Allowance then in the 2019:20 tax year you have a Personal Allowance of £12,500.

Next is the savings starter rate of tax where upto £5,000 savings interest is taxed at 0% (the £5,000 is reduced pound for pound by any wages, taxable benefits, pension income etc over your Personal Allowance).

Only after these are used does the savings nil rate (aka PSA) apply.

Remember Carers Allowance is taxable so that has to be taken into account as well as your pension income and savings interest.

Paul_Herring

I only have two options

If your provider(s) is/are only providing limited options, it may be worth transferring the funds to one that provides more, like the UFPLS option mentioned.

xylophone

Remember Carers Allowance is taxable so that has to be taken into account as well as your pension income and savings interest.

https://www.carersuk.org/help-and-advice/financial-support/help-with-benefits/carers-allowance

OP seems to be indicating that pension plus CA would be around £8000?

If however her pension is £8000 and the CA is around £3500 she is still within her
19/20 PA - savings income of £4500 would come within the starting rate for savings so she would pay no tax on it.

She can see "Alex" here http://www.taxvol.org.uk/about-tax/entitled-10-band-savings-interest/ substituting 19/20 PA where appropriate.

xylophone

I only have two options, take the pension full or take 25% cash free so the cash free seemed better?

OP, what kind of pensions are these (Defined Contribution or Defined Benefit)?