Pension tax free withdrawal

Spivo46

I have taken redundancy which was paid in April this year. I decided to pay in £20k of the payment in to my pension to avoid tax. This was after taking the £30k tax free allowance. Do i need to wait a period of time to take any of the tax fee allowance from pension? If no, then is that not some kind of tax avoidance issue?

Pat38493

Spivo46 said:

I have taken redundancy which was paid in April this year. I decided to pay in £20k of the payment in to my pension to avoid tax. This was after taking the £30k tax free allowance. Do i need to wait a period of time to take any of the tax fee allowance from pension? If no, then is that not some kind of tax avoidance issue?

Are you over 55 for a start?  Assuming yes, I think this is allowed as it's called redundancy sacrifice if it was done by your employer.

Other than that, I am not aware of any reason why you can't do that - I think the amount above 30K seems to be classified as earned income for pension purposes, so you can take your 25% tax free back out again right away if you want.

This is no more tax avoidance than for example if you lived on savings in your last year of employment and paid your entire salary into your pension (up to the 60K limit).  It's allowed.

molerat

You can withdraw as soon as the provider will allow.  As  long as you have only paid in as much as your income allows then there are no tax issues.