£20K PENSION POT. WANT TO CASH IN!

24Tweezers

I am almost 57 years old.   I no longer work, (not in good health) and am basically a kept woman, if you like.  I signed £1250 of my personal tax-free allowance across to my husband a few years back.  Other than PIP, I have no income to call my own. 
As a family unit, we are financially fine.  We outright own our home and have received inheritances with which to see our days out.   I have a very old pension plan, that has not had any funds paid in for, well, must be thirty years - which was with Equitable Life, now Utmost.   I want to cash this in.  It is worth a little over £20,000 as at 26 November, 2020.
Could someone please give me the straight forward steps I need to take to get the ball rolling?  From what I can make out, I firstly need to cancel the Marriage Allowance, £250 that my husband receives.  Then would I be better off taking £14,000 out of the pot this side of the new tax year, and then once we are into the 2021-2022 Tax Year taking the remaining balance, so I do not pay any tax?
Am I missing something obvious in proceeding with my plan as detailed above?    Thanks for taking the time to read this.

wjr4

Why do you want to encash it? 

24Tweezers

The amount won't account for much of an income for me, with things being so unpredicable,
I'd rather have control of the capital myself.

molerat

Why do you want to deprive your OH of his extra £250 ?

With a tax code of 1125 and no other income you can take £15000 (or maybe £16250) without paying any tax (although tax will be deducted from the first payment and will have to be reclaimed)

What do you need to do to get the ball rolling - contact Utmost https://www.utmost.co.uk/pensions/find-out-about-your-options/take-your-pension-pot-number-lump-sums/

dunstonh

24Tweezers said:

The amount won't account for much of an income for me, with things being so unpredicable,
I'd rather have control of the capital myself.

What control are you after?    Pensions have the same investment options as S&S ISAs or unwrapped.  All of them offer you the same control.      
If you dont need to spend the money now then there is usually no point taking the money out of the pension wrapper unless there is another justification.  "control" is not a justification as you are in no less control of your money in a pension than you are with any alternative.  (although moving it from Utmost to another provider may be worth doing).

xylophone

which was with Equitable Life, now Utmost. 

 Are you sure that this provider will allow flexible access to the pension?

If not, you will need to move it to one that does, example Hargreaves Lansdown.

https://www.hl.co.uk/pensions/transfer-to-the-sipp

If you have no  income at all other than PIP, you could take the tax free PCLS (£5000) and enough of the (taxable) balance to keep you tax free in the current tax year (£11250?) with rest in the next.

You may well find that the provider deducts tax before payment- if so you will need to reclaim through HMRC.

24Tweezers

Ah, so not as straight forward as I thought?  I guess I need to speak with Utmost and discuss things with them.
Thanks, All, for your comments.

Dazed_and_C0nfused

From what I can make out, I firstly need to cancel the Marriage Allowance, £250 that my husband receives.  

What makes you think that??

24Tweezers

I believed I'd signed over £1250 of my yearly tax free figure to my husband which was worth £250 to us through his taxes.  I assumed by cancelling this I'd gain the £1250 allowance back, but have since found out it wouldn't come into effect during this tax year, anyway.  

Dazed_and_C0nfused

It would mean you could pay £250 less tax but he would have to pay £250 more so overall you wouldn't (as a couple) gain anything by changing it.

green_man

Pulling together most of what’s already been said above.

As stated above. Unless you actually want the money for something there’s little reason why it can’t stay where it is for now.

Assuming you do want to go ahead then check with Utmost if they allow Uncrystallised Funds Pension Lump Sum (UFPLS) withdrawals. If not you will have to transfer elsewhere first.

If they do allow this type of withdrawal then there is no need to change your or OH tax codes you can work with what you have.  You can withdraw 2 UFPLS over two tax years.   If your tax free allowance is £11250 (standard 12500-1250) and you have no additional taxable income then you can withdraw 11250 x 4/3 = £15000 in any particular year without having to pay additional tax. It is likely if you do this that you will overpay tax initially and have to claim it back (probably form P55 initially?)  

if you do have to transfer your pot somewhere first, check you don’t fall foul of early closure rules with associated extra fees when withdrawing from this new provider.