Claiming AVCs and tax implications

lakelady

I will earn approx £6k this tax year, roughly half from an employer, and half from a pension which kicked in in January. Next tax year, I will earn about £12500 from the pension, and potentially (but not definitely) another £3k or so from employment.

I have approx £18k in AVCs, which I can claim now.

Should I claim it now, or tax wise, would it be better to wait until after 5 April? Also, is it possible to work out how much of the £18 I will keep, please? The company cannot advise, as they don't have access to my tax records, although the situation is exactly as above.

Thanks in advance.

xylophone

I have approx £18k in AVCs, which I can claim now.

Will you be able to take a 25% tax free lump sum from the AVCs with the balance taxed as income in the year of receipt?


Is your Personal Allowance in the current tax year £11,850?

Do you have any other non savings income on the current tax year?

Do you have savings/dividend income in the current tax year?

If so, how much?

lakelady

Hello
Yes, it is 11 850

No, I don't have any other income, and yes, I have £750 in interest on bank account savings, which will not grow before April.

xylophone

The Personal Allowance for 18/19 is £11,850.

It seems that you have around £5850 of unused allowance in this tax year.

Assuming that you chose to take the whole of the £18,000 in this tax year it looks like £4500 tax free, £5850 tax free (within your PA) and £7650 taxed at 20%.

You would not owe tax on the savings income as it would be within the personal savings allowance.

Do you have time to arrange the payment in this tax year?



And see https://adviser.royallondon.com/technical-central/pensions/benefit-options/emergency-tax-and-lump-sum-withdrawals/

lakelady

Thank you!

Yes, I can arrange it within the tax year, and the other information is really helpful.

Thanks again

xylophone

https://forums.moneysavingexpert.com/discussion/comment/75236281#Comment_75236281

See post 6 - have you obtained a new state pension statement?

lakelady

Yes, I have a statement, and I am paying voluntary contributions.

Sorry to bother you twice, but I am new to all of this, and don't want to get it wrong.

I think I will get it in this tax year, while I still have some unused allowance.
thanks