LTA and divorce

suzmoo

I am going to start divorce proceedings and I shall be withdrawing my half share of my husband's pension to put it into a Sipp of my own. I am 73 and want to know if it is worth waiting until after my 75th birthday to withdraw the money - delaying the divorce until then too. Will this mean that I do not have to pay any tax on the amount over the current government limit or would it be better if I take up to the limit now and then the rest after I am 75 what would the tax situation in either situation be please?

squirrelpie

How old is your husband and what is his situation wrt the LTA test? If he has to pay more than you would, there'll be less in the pot to split perhaps?

Malthusian

Any funds you receive from a Pension Sharing Order will be treated as uncrystallised funds and will be tested against your Lifetime Allowance.

If they came from a crystallised fund you will not be able to draw tax free cash from them. You may get a credit to your own lifetime allowance (as they were already tested against his).

The timing may therefore not make a whole lot of difference. We would need more information to even make a general comment, namely how old he is, how big the fund is, whether the fund is crystallised or uncrystallised, and what transitional protections you and he have.

You need to speak to an Independent Financial Advisor (as well as a solicitor). Taking advice from people down the pub on a fund presumably worth millions would be mad. There are too many variables for pub advice to be reliable.

I don't know whether a lifetime allowance test would apply if someone over 75 divorces and receives a pension credit from someone under 75 (i.e. it will bypass the age 75 test), but as the funds will have to be tested against the lifetime allowance at some point, either when the PSO receiver wants to draw the funds or dies, again I'm not sure it matters much.