Private pension pot

Stewert1dn

I have recently taken 25% out of my private pension, obviously tax free.
My question, I am not at retirement age, if I have no form of income whatsoever am I allowed to draw down the rest of my private pension?
If so and keep it below my tax allowance, let's say £1000 per month, would this be tax free?? TIA

lisyloo

If you have no other income and it’s below the basic rate tax threshold (£12570) then it’s tax free.

what I’m not sure about is whether you have to claim it back.

ewaste

If you have already been able to take the 25% tax free pension commencement lump sum. Then you will be over 55 which is the current minimum age for accessing a pension.

You can drawdown your pension, presumably Defined Contribution, upto your personal allowance of £12,570 per annum. Anything over that will be taxable the same as it would with any other income source. It might take a bit of sorting out as you may have an emergency tax code applied. You can either sort this out by contacting HMRC or waiting until P60 time and they refund any overpayment.

If you didn't have an immediate need for the lump sum you theoretically could have taken a slightly different route. It's often mentioned on this forum of only 'crystallising' and then drawing down £16,760 per annum. 25% of that crystallisation is tax free and the remaining £12,570 uses up the personal allowance.

MallyGirl

Note that if you take any taxable income from your pension then you are limited to max £4k gross contributions in the future if you were to work again. This may not be an issue - you may not want/need to work again.

molerat

If you have not already been allocated a tax code to the pension, not sure how it works when you take a tax free only amount, you can withdraw up to £1048 without paying tax.  A code should then be allocated to that pension permitting further withdrawals without paying tax according to the number of 1/12ths of the tax allowance relevant to the month.

Marcon

lisyloo said:

If you have no other income and it’s below the basic rate tax threshold (£12570) then it’s tax free.

what I’m not sure about is whether you have to claim it back.

Not once the correct tax code has been allocated - any overpaid tax is then repaid automatically with the next instalment of pension. 

Albermarle

Stewert1dn said:

I have recently taken 25% out of my private pension, obviously tax free.
My question, I am not at retirement age, if I have no form of income whatsoever am I allowed to draw down the rest of my private pension?
If so and keep it below my tax allowance, let's say £1000 per month, would this be tax free?? TIA

There is no such thing as a retirement age, and when you retire and when you can take your pension(s) are two totally different things .
You can take this pension whilst still working . On the other hand whenever you retire you will get the state pension at the state pension age at that time ( currently 66) 

zagfles

lisyloo said:

If you have no other income and it’s below the basic rate tax threshold (£12570) then it’s tax free.

what I’m not sure about is whether you have to claim it back.

It might sound pedantic but be careful with terminology here. The initial 25% PCLS is "tax free". Any further income taken is "taxable". But as the first £12570 of taxable income is covered by the personal allowance, there is no tax to pay. It's an important distinction, because as per MallyGirl's post taking any taxable income triggers the MPAA, even if no tax is paid on it because it's covered by the PA. "Tax free" is usually taken as meaning income which it not taxed and doesn't use up any tax allowances.

lisyloo

Sure. I agree about the terminology. Thanks.
its subject to tax but at 0%.