Pay less tax when withdrawing money from stock platforms?

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  • EthicsGradientEthicsGradient Forumite
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    LouP25 said:
    Money you pay into a SIPP or other type of pension is untaxed going in, i.e. pension contributions are deducted from your gross income before income tax is calculated, and taxed when drawing it out. Money you pay into an ISA is from taxed income, i.e. tax has been paid on the money when you were paid it, and the money is not subject to tax when drawing it out of the ISA.
    Will it be legal to move my small pension pot to ISA, after I invested it for 2+ years, so it increases a bit? It wasn't taxed coming in, and won't be taxed coming out of ISA. Is it legal?
    No, a pension has to stay as a pension, until you reach the age you're allowed to withdraw from it (in your late 50s). When money comes out of it after that, 25% is tax free; the rest is counted as income, and subject to income tax.
  • LouP25LouP25 Forumite
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    got it, thank you so much!
  • AlbermarleAlbermarle Forumite
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    LouP25 said:
    got it, thank you so much!
    If you start another job and have a new pension , you can leave the old pension as it is ( to hopefully slowly grow) or you could transfer it into your new pension.
    So as above you can not transfer a pension to an ISA or some other investment account , but you can merge pensions together quite easily .
  • jimjamesjimjames Forumite
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    LouP25 said:
    Money you pay into a SIPP or other type of pension is untaxed going in, i.e. pension contributions are deducted from your gross income before income tax is calculated, and taxed when drawing it out. Money you pay into an ISA is from taxed income, i.e. tax has been paid on the money when you were paid it, and the money is not subject to tax when drawing it out of the ISA.
    Will it be legal to move my small pension pot to ISA, after I invested it for 2+ years, so it increases a bit? It wasn't taxed coming in, and won't be taxed coming out of ISA. Is it legal?
    No, you can't move a pension to an ISA
    Remember the saying: if it looks too good to be true it almost certainly is.
  • LouP25LouP25 Forumite
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    Thank you all so so much! This forum is definitely where my pension/isa  education begins :) I wish I had a degree in this, it's truly a useful necessary stuff.
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