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A Basic question about LTA...
C_Mababejive
Posts: 11,668 Forumite
I know the current LTA is £1,055,000 and that Government have committed to raising it by RPI.
Lets just say for now that LTA is £1m to make it easier to type and for this question only !
If my pension pot went over £1m how would i be taxed?
If i knew at the beginning of a tax year that my pot was valued at say £999,970 but i projected that it would exceed £1m at some time later that same year, if i withdrew some money to prevent that happening ,would i still be ok and not suffer penalties?
Lets just say for now that LTA is £1m to make it easier to type and for this question only !
If my pension pot went over £1m how would i be taxed?
If i knew at the beginning of a tax year that my pot was valued at say £999,970 but i projected that it would exceed £1m at some time later that same year, if i withdrew some money to prevent that happening ,would i still be ok and not suffer penalties?
Feudal Britain needs land reform. 70% of the land is "owned" by 1 % of the population and at least 50% is unregistered (inherited by landed gentry). Thats why your slave box costs so much..
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Comments
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First things first, what have you got in invested in??
We all want a piece of that action
If i knew at the beginning of a tax year that my pot was valued at say £99,970 but i projected that it would exceed £1m at some time later that same year,0 -
To be pedantic, it is CPI not RPI, which will make a difference over time.C_Mababejive wrote: »I know the current LTA is £1,055,000 and that Government have committed to raising it by RPI.This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com0 -
Now fixed ..
Feudal Britain needs land reform. 70% of the land is "owned" by 1 % of the population and at least 50% is unregistered (inherited by landed gentry). Thats why your slave box costs so much..0 -
How much is in the pot is not directly relevant , the LTA only comes into play when you take benefits from the pension , or crystallise it . A so called BCE - a Benefit Crystallisation Event .If my pension pot went over £1m how would i be taxed?
For example if you crystallised £200K of the £1 million , then that £200K would count towards the LTA , but the remaining £800K would not until it was also crystallised.
When you reach 75 , any remaining uncrystallised money is then counted towards the LTA.
The rules are a bit more complex than that but basically most people reach LTA in stages during retirement .0 -
Sorry, so if there was £999,970 in the account then the best policy would be to crystallize it all immediately and stop worrying? Or have I missed something? (I'm not in the OP's hypothetical position, so I haven't investigated the ramifications, but on the basis of what's been said so far it seems quite simple).0
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squirrelpie wrote: »Sorry, so if there was £999,970 in the account then the best policy would be to crystallize it all immediately and stop worrying? Or have I missed something? (I'm not in the OP's hypothetical position, so I haven't investigated the ramifications, but on the basis of what's been said so far it seems quite simple).
That would work.No reliance should be placed on the above! Absolutely none, do you hear?0 -
what do you mean by "crytallise"..?Feudal Britain needs land reform. 70% of the land is "owned" by 1 % of the population and at least 50% is unregistered (inherited by landed gentry). Thats why your slave box costs so much..0
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C_Mababejive wrote: »what do you mean by "crytallise"..?
Take 25% as tax free cash and move the rest into drawdown.0 -
C_Mababejive wrote: »what do you mean by "crytallise"..?
https://www.pensionbee.com/pensions-explained/pension-types/what-is-a-crystallised-pension0 -
To avoid a pension lifetime allowance tax bill altogether you would need to crystallise your entire pension before it hit the lifetime allowance, and then withdraw all growth from the crystallised balance until age 75 when it would next be tested against the lifetime allowance.0
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