Can I put my pension in an ISA bubble?

gbhxu

Is it possible to put a small pension in the bubble of an ISA thus making any income from it tax free?

AlanP_2

No, pension and ISA are two separate tax wrappers. You can withdraw income from the pension, paying tax as appropriate, and put it into an ISA but that's probably not what you want to do.

What are you trying to achieve and what amounts are involved as someone on here may have suggestions for you to consider?

SonOf

gbhxu wrote: »

Is it possible to put a small pension in the bubble of an ISA thus making any income from it tax free?

No. That would not be tax efficient in most cases.

ISAs and pensions share the same investment options and can have exactly the same charges. The only difference is taxation and maturity process.

Whilst the money is invested in the pension, it is more tax-free than the ISA (pensions are outside of the estate - ISAs are not). There is no point paying tax to get money out of a pension to then pay it into an ISA.

There can be scenarios in financial planning where utilising the unsued annual allowance on the pension to then feed into an ISA (or back into a pension) can be viable.

IanSt

gbhxu wrote: »

Is it possible to put a small pension in the bubble of an ISA thus making any income from it tax free?

I take it that you're 55+ as you're talking about taking the income from it.

If you're not then there is nothing you can do, but if you are, then you could take the 25% tax-free lump sum and put that into an ISA. But for the rest you can't just move a pension into an ISA, you'll need to draw out the money first, which apart from the first 25% is (depending on your other income) going to be potentially taxable.

However you would need to be absolutely sure of the benefits of taking any of the money out of your pension to put into an ISA before doing this. If you are unsure in any way then it would probably be best for you to add your reasons why to this thread.

cloud_dog

Hi SonOf

When you state...

SonOf wrote: »

No. That would not be tax efficient in most cases.

Can I just confirm that you are talking about this primarily from an IHT perspective?

SonOf

cloud_dog wrote: »

Hi SonOf

When you state...
Can I just confirm that you are talking about this primarily from an IHT perspective?

Not just IHT but the tax that would be paid when drawing the money from the pension.

cloud_dog

SonOf wrote: »

Not just IHT but the tax that would be paid when drawing the money from the pension.

In relation to withdrawing it all in one go or via a phased approach?

SonOf

cloud_dog wrote: »

In relation to withdrawing it all in one go or via a phased approach?

In one go. As I mentioned in the earlier post, there can be scenarios where it can be viable. However, in the limited way the OP has asked the question, the answer would be no.

If the scenario was expanded on with more info supplied, then it is possible the answer could change.