Advice on accessing pension cash

atush

If you are a HRTaxpayer and want to minimize tax take the full TFLS of 25%. then take any other money when you either need it, or are paying BR tax and can get it w/o paying as much tax.

Another option would be if you have a younger spouse, who can inherit what pension you havent used and not pay tax.

kilfinan

Thanks everyone. It looks to me like it might be best to remove the full annual ISA allowance and then spread across ISA's for my wife and me. That way we get tax free immediate access and leave the remaining amount in the pension and drawdown only as required?

We already have a very small L&G tracker ISA in my wife's name which we could top up and open a new in my name.

Does that make sense?

atush

Well 50K is more than enough for 2x this years isa. You can save the balance for next years.

So yes it makes sense to put your TFLS into s&s isas.

crv1963

If you don't need the cash, why touch it at all until either you do need it or it is announced that TFLS will not be allowed from a future date? They would need to give people notice of any changes as many rely on the TFLS in their retirement planning.

Where it is now sits outside of your estate if you die and your widow can access it tax free for the rest of her life. If you go first will she have enough pension income?

dunstonh

Thanks everyone. It looks to me like it might be best to remove the full annual ISA allowance and then spread across ISA's for my wife and me. That way we get tax free immediate access and leave the remaining amount in the pension and drawdown only as required?

What will that achieve?

Whilst invested in the pension, the money is more tax free than the ISA. (e.g. Pension is outside of the estate. ISA is not).

Also, the 25% TFC is available any time. So, the longer you leave it, the larger it becomes.

Unless there is a justifiable reason for doing so, you should leave it where it is.

IanSt

crv1963 wrote: »

If you don't need the cash, why touch it at all until either you do need it or it is announced that TFLS will not be allowed from a future date? They would need to give people notice of any changes as many rely on the TFLS in their retirement planning.

Given a potential JC government and their fondness for people to pay their 'fair' share of tax, then what are the chances that they might look at the ISAs tax free returns and seek to get at least some of that money back into the taxable arena.

So if the plan was to move the TFLS into a S&S ISA then you'd have to hope that at the same time they didn't also announce that all future ISA contributions are to be stopped or severely limited down from the current £20,000 - though this does rely on them not just ripping up ISAs in their entirety.

crv1963

With respect IanSt I suggested leave things as they are. I agree with you that political uncertainty is problematic, but you have to work within the rules as they apply here and now.

Under current rules his widow would inherit it all tax free either take or draw as a pension, leave it untouched and pass to someone else- a child/ children if she does not need it?

By moving to ISA it then forms part of his or if he puts it in her name, her estate for IHT purposes.