Aviva drawdown and tax deductions (Edit) - new additional quick question

Dazed_and_C0nfused

The emergency tax code is 1257L.

Basic rate refers to tax code BR (20%).

JamesP8

Just a quick question. So the small pot rule allows three small pots to be taken of up to £ 10,000 each from both DB and DC schemes with no LTA consequences? Thanks.

Sea_Shell

DH spoke to Aviva this morning.  The call handler didn't know if the segments could be treated individually or not. 

They will investigate and have asked him to ring back in 3-5 days (cheek)

Sea_Shell

After some deliberation, and a chat with a knowledgeable person at Aviva, DH has decided to take all 5 segments of this plan in one go and then not touch any other pensions this tax year.

It's worth about £18,000 total, so with 25% tax free they'll be minimal (or maybe no) tax to pay.

They are emailing over all the forms that can be verified signed on line.

Marcon

JamesP8 said:

Just a quick question. So the small pot rule allows three small pots to be taken of up to £ 10,000 each from both DB and DC schemes with no LTA consequences? Thanks.

Three small pots from personal pensions + any number of small pots taken direct from occupational schemes (and a DB scheme will be an occupational scheme - the whole of the pot has to be taken in one go each time you use the small pots regime, so you can't take bits at a time) use 0% of the LTA. 

Note that 'group personal pensions' and the like are still personal pensions - they aren't classed as occupational schemes just because they are available as workplace pensions. 

gizz_10

Marcon said:

JamesP8 said:

Just a quick question. So the small pot rule allows three small pots to be taken of up to £ 10,000 each from both DB and DC schemes with no LTA consequences? Thanks.

Three small pots from personal pensions + any number of small pots taken direct from occupational schemes (and a DB scheme will be an occupational scheme - the whole of the pot has to be taken in one go each time you use the small pots regime, so you can't take bits at a time) use 0% of the LTA. 

Note that 'group personal pensions' and the like are still personal pensions - they aren't classed as occupational schemes just because they are available as workplace pensions. 

so if my employer only offers a group personal pension with Scottish Widows - is this not classed as an occupational scheme? 
If  not how do you define an "occupational scheme"?

Marcon

gizz_10 said:

Marcon said:

JamesP8 said:

Just a quick question. So the small pot rule allows three small pots to be taken of up to £ 10,000 each from both DB and DC schemes with no LTA consequences? Thanks.

Three small pots from personal pensions + any number of small pots taken direct from occupational schemes (and a DB scheme will be an occupational scheme - the whole of the pot has to be taken in one go each time you use the small pots regime, so you can't take bits at a time) use 0% of the LTA. 

Note that 'group personal pensions' and the like are still personal pensions - they aren't classed as occupational schemes just because they are available as workplace pensions. 

so if my employer only offers a group personal pension with Scottish Widows - is this not classed as an occupational scheme? 

No. 

gizz_10 said:

If  not how do you define an "occupational scheme"?

Occupational pensions are set up by employers to provide retirement benefits for their employees (and 'contingent beneficiaries' such as their spouse/partner) only; other people can't decide to join.  

A group personal pension is a scheme chosen by the employer, but with an individual contract in place between the pension provider and each member of staff.

Sea_Shell

Sea_Shell said:

After some deliberation, and a chat with a knowledgeable person at Aviva, DH has decided to take all 5 segments of this plan in one go and then not touch any other pensions this tax year.

It's worth about £18,000 total, so with 25% tax free they'll be minimal (or maybe no) tax to pay.

They are emailing over all the forms that can be verified signed on line.

Just by way of an update...the money has landed!!!

All very efficient on Aviva's part.

About £4200 of tax has been deducted under "emergency" tax.   So once we get the P45 through (which they said they'd send), we can make the necessary re-claim of the tax on-line.   Hopefully that'll be just as smooth!!!  

I understand it would be the P50Z form that would need to be completed, as he's had a lump sum which was the full amount of the pension pot (that policy).

Sea_Shell

The paperwork has now arrived from Aviva, with 5 separate P45s!!

I trust we can just add all the income/tax together and use the total figures when reclaiming the tax?

Also, as I applied for the marriage allowance transfer, should HMRC automatically include this, even though the P45s only state a tax code of 1257L.

He'll need the extra, as they've deducted tax on income of approx £13,300 (75%)

dunstonh

The paperwork has now arrived from Aviva, with 5 separate P45s!!

Were your Aviva pensions older segmented plans (i.e. such as some of the old AXA and Friends Provident plans)?   That would explain multiple P45s if so.

I trust we can just add all the income/tax together and use the total figures when reclaiming the tax?

yes.  

Also, as I applied for the marriage allowance transfer, should HMRC automatically include this, even though the P45s only state a tax code of 1257L.

You may want to wait until after the marriage allowance transfer has been confirmed.  Otherwise, you could end up waiting another 18-24 months for a correction for that bit.