Pension Possibility

MUM40

I’m hoping someone can give me some basic pension advise.

I currently have 3 pensions and upon advise from a consultant advised to take from a pension that I have with Scottish widows

The pension pot is around 53k, and I know athat I can get 25% tax free.
How much tax would i pay on the balance.

I work full time and earn a gross salary of 26K
Currently pay 3% of salary into another company pension scheme
Currently on tax code 1034ML1 due to some company taxable benefits

I am currently 56

Thanks for all your help,

Dazed_and_confused

Ultimately you would need to pay some 20% tax and some 40%.

The exact proportion would depend on your other taxable income.

Not sure what you mean by "gross salary". Salary is often irrelevant for tax purposes these days as pension contributions are often deducted first meaning a salary of £26k might only actually be a taxable salary (the amount which goes on your P60) of say £24k.

The pension company might deduct a lot of tax when you take the pension and get a refund of some of it from HMRC later.

Have you thought about taking part of it in the current tax year and part in the next tax year?

cloud_dog

OP, I assume you are withdrawing the money for a reason, other than you can?

xylophone

You intend to take the whole £53,000 in the current tax year?

Has your adviser mentioned the MPAA (in case it is relevant to your future plans)?

https://www.moneyadviceservice.org.uk/en/articles/money-purchase-annual-allowance

Taking the pension in full would add £39,750 to your taxable income in the year of receipt.

It is likely that your pension provider would pay out the pension as in the chart here

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

You would need to contact HMRC re the necessary adjustment in tax payable see link.