Is the flexi access drawdown account the same as if you hadn't withdrawn any money?

isayhello

I understand that if you took all your money out using FAD, then 25% would be tax free and the remaining 75% would be in a drawdown account but still invested.

Am I right in thinking this is exactly the same as if you hadn't withdrawn the money but left it as it was already, apart from the 25% that you now have gained.

Are they identical in terms of their status and how they're invested and benefits etc? as I couldn't think of a reason not to take it all out as FAD in one go if you wanted 25% of it.

dunstonh

Am I right in thinking this is exactly the same as if you hadn't withdrawn the money but left it as it was already, apart from the 25% that you now have gained.

It doesn't need to be exactly the same with some providers.   Some providers/platforms allow you to have different investments for your crystallised fund from your uncrystallised fund.

squirrelpie

isayhello said:

I understand that if you took all your money out using FAD, then 25% would be tax free and the remaining 75% would be in a drawdown account but still invested.

Am I right in thinking this is exactly the same as if you hadn't withdrawn the money but left it as it was already, apart from the 25% that you now have gained.

Are they identical in terms of their status and how they're invested and benefits etc? as I couldn't think of a reason not to take it all out as FAD in one go if you wanted 25% of it.

They're not identical, no. In the first case, the remaining 75% is 'crystallised', which means you can't withdraw any more from it tax free; it is all taxable when/if you withdraw it, including any gains. In the latter case, it is all 'uncrystallised', which means you can take 25% tax free and the rest is taxable. So the 25% tax free might be bigger or smaller when you do come to take it.

You seem to be using 'take it out' to mean 'crystallise', whereas usually people use the phrase to mean 'withdraw' or 'grab the cash' or somesuch. And yes, if you need the full 25% tax free then you would have to crystallise everything. But you could also withdraw the same amount of money by crystallising a bit more than 25% and taking it as a UFPLS. (I can't be bothered to work out the exact percentage, which depends on your tax state anyway)

isayhello

squirrelpie said:

They're not identical, no. In the first case, the remaining 75% is 'crystallised', which means you can't withdraw any more from it tax free; it is all taxable when/if you withdraw it, including any gains. In the latter case, it is all 'uncrystallised', which means you can take 25% tax free and the rest is taxable. So the 25% tax free might be bigger or smaller when you do come to take it.

You seem to be using 'take it out' to mean 'crystallise', whereas usually people use the phrase to mean 'withdraw' or 'grab the cash' or somesuch. And yes, if you need the full 25% tax free then you would have to crystallise everything. But you could also withdraw the same amount of money by crystallising a bit more than 25% and taking it as a UFPLS. (I can't be bothered to work out the exact percentage, which depends on your tax state anyway)

Ah ok thanks, I was thinking more are they the same type of product apart from the things you mentioned ie can be invested in the same things etc without restriction, which it sounds like they can be depending on the platform/provider

Albermarle

isayhello said:

squirrelpie said:

They're not identical, no. In the first case, the remaining 75% is 'crystallised', which means you can't withdraw any more from it tax free; it is all taxable when/if you withdraw it, including any gains. In the latter case, it is all 'uncrystallised', which means you can take 25% tax free and the rest is taxable. So the 25% tax free might be bigger or smaller when you do come to take it.

You seem to be using 'take it out' to mean 'crystallise', whereas usually people use the phrase to mean 'withdraw' or 'grab the cash' or somesuch. And yes, if you need the full 25% tax free then you would have to crystallise everything. But you could also withdraw the same amount of money by crystallising a bit more than 25% and taking it as a UFPLS. (I can't be bothered to work out the exact percentage, which depends on your tax state anyway)

Ah ok thanks, I was thinking more are they the same type of product apart from the things you mentioned ie can be invested in the same things etc without restriction, which it sounds like they can be depending on the platform/provider

For those platforms that do not split up crystallised and uncrystallised pots( and just report how much % of the pot is crystallised), you have no choice but to have the same investments, whether crystallised or not.
For those platforms that have two separate pots , you can have the same or different investments in each.