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AVC's and payrise
Slammeddeluxe
Posts: 20 Forumite
Hi, my wife has just been given a large promotion at local goverment. Some time ago we did some AVC's to reduce our tax liability. My questions are as follows - she will be significantly into higher rate tax with this new position - if she pays all her increase into AVC's can the tax free lump sum be taken at aged 55 and still leave her main pension intact ? If the tax free lump sum was taken - I presume no income tax is payable on this ? We need to pay off a mortgage on a foreign property hence the question. Thanks
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Comments
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No she can only take the AVC as tax free lump sum when she takes her main LGPS benefits. She can retire at 55 with significant but not unfair reduction in pension.0
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I don't think she can get the full benefit of the AVC by taking it earlier than the main scheme benefits.
https://www.lgpsmember.org/your-pension/planning/paying-extra/additional-voluntary-contributions/
A pension tax free lump sum is not taxable.
The only time you would have to pay tax on it is if you confuse HMRC by telling them about it.0
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