Taking all your money out of a pension pot?

notniluk

I'm self employed and have a small pension that I used to contribute to when I was in full time employment and not payed in to for 10 yrs now.  It has grown a little over that time but the return on the pension pot is relativly small, I retire in 10 years time and it might give me £100 a month.  I have other better pots plus as of now still entitled to sate pension. 

What I'm thinking about is drawing all the money out in a lump sum basicaly to spend some of it but also invest a chunk in an isa or post office bonds etc.  Question is as I'll pay tax on 75% of it 25% being tax free - Will this be classed as earnings on my tax return??  Cheers

Browntoa

What age are you ? 

Browntoa

Guide here about cashing in after you are 55

https://forums.moneysavingexpert.com/discussion/3447527/can-i-cash-in-my-pension

penners324

Why not transfer it to one of your other pension pots?

notniluk

penners324 said:

Why not transfer it to one of your other pension pots?

Just looking for some cash now, I'm 56 so can access it but just wondered if by paying tax at source when you draw it down I'll have to declair it on my tax return, don't want to pay tax on it again!

dunstonh

What I'm thinking about is drawing all the money out in a lump sum basicaly to spend some of it but also invest a chunk in an isa or post office bonds etc

 Paying tax to then stick it in savings is usually a very bad thing to do.

Question is as I'll pay tax on 75% of it 25% being tax free - Will this be classed as earnings on my tax return?? 

The 75% is subject to income tax and taxed accordingly. It is treated as income from a means tested benefits point of view.

 It has grown a little over that time but the return on the pension pot is relativly small, I retire in 10 years time and it might give me £100 a month. 

So, why would you want to take it out, lose a chunk of it in tax and put it into things that earn even less?

Dazed_and_C0nfused

notniluk said:

penners324 said:

Why not transfer it to one of your other pension pots?

Just looking for some cash now, I'm 56 so can access it but just wondered if by paying tax at source when you draw it down I'll have to declair it on my tax return, don't want to pay tax on it again!

Tax may well be deducted at source but you still have to include the taxable income on your Self Assessment return and your self assessment calculation will include any tax due on this income.

And further down the calculation you will be given credit for any tax deducted at source.

Just like with any other PAYE income.

Clive_Woody

Why not only take out what you plan on spending and leave the rest where it is. Little point taking it out, paying tax, only to then invest it in an ISA.

coyrls

notniluk said:

penners324 said:

Why not transfer it to one of your other pension pots?

 ....... don't want to pay tax on it again!

You haven't paid any tax on your pension contributions, that's pretty much the point.  You will pay more tax than you need to taking the whole lot out at once.

atush

Stop.  Think.

If you need cash, take out only what you need or at most 25% as that is tax free.  If you dont need cash, let it ride.

if you are unhappy with the performance, you may not have been putting away enough or you may have invested too cautioulsy overall/

AnotherJoe

Clive_Woody said:

Why not only take out what you plan on spending and leave the rest where it is. Little point taking it out, paying tax, only to then invest it in an ISA.

Exactly this but switch the funds you are invested in to something better. It's not the "pension" that's done poorly it's the investments.