Maxing tax free drawdown

Dazed_and_C0nfused

There is no need to have paid £720 tax though.

Anyone under 75 can contribute £2,880 and get the £720 tax relief, there is no requirement to have actually paid £720 in income tax.

You could just as easily make the argument that £16,666 is the perfect withdrawal rate as you are not only getting all of that without paying tax but you can get HMRC to pay you(r pension fund) £720 by contributing £2,880.

SomeMadeUpName

Dazed_and_C0nfused said:

There is no need to have paid £720 tax though.

Anyone under 75 can contribute £2,880 and get the £720 tax relief, there is no requirement to have actually paid £720 in income tax.

You could just as easily make the argument that £16,666 is the perfect withdrawal rate as you are not only getting all of that without paying tax but you can get HMRC to pay you(r pension fund) £720 by contributing £2,880.

No, totally, don't think that I don't get that.
& tbh that's a much more likely scenario for me personally, as I have made a lifestyle of low income, low outgoing, tax efficiency over the last 15yrs.
I'm just trying to illustrate that counter intuitively if you can't quite make your life fit into £16,666 then maybe drawing a fair bit more works out better than drawing just a little bit more (because for every £3 of taxable you draw out you access £1 of tax free) so long as you re-invest the £3.

Anyway, I think I'm labouring the point now.

pensionpawn

Dazed_and_C0nfused said:

There is no need to have paid £720 tax though.

Anyone under 75 can contribute £2,880 and get the £720 tax relief, there is no requirement to have actually paid £720 in income tax.

You could just as easily make the argument that £16,666 is the perfect withdrawal rate as you are not only getting all of that without paying tax but you can get HMRC to pay you(r pension fund) £720 by contributing £2,880.

I agree that you don't need to pay the £720 tax (or £251 tax) however if you 'needed / desired' a higher drawdown amount without paying (net) tax, this gives you that option.