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pension question

I have 2 private pensions both frozen 
Have taken tax fee amounted  at 55

What amount can I take from what is left without paying any tax on even though still have years before pension date 
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Comments

  • Flugelhorn
    Flugelhorn Posts: 6,678 Forumite
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    I think you can take money out but it is considered as income and hence would be taxable unless your other income is less than the personal allowance 
  • aayush said:
    I have 2 private pensions both frozen 
    Have taken tax fee amounted  at 55

    What amount can I take from what is left without paying any tax on even though still have years before pension date 
    Depends on what other taxable income you have, and the type of income as well.
  • Think the link info below will be helpful, essentially £12,570 is personal Income Tax allowance, so income up to that figure probably tax free.
    .
    https://www.gov.uk/income-tax-rates
  • aayush
    aayush Posts: 1,295 Forumite
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    am 59 years old earn at present 24 thus need to ask if can use the pension to use as deposit on unit for my self
  • Brie
    Brie Posts: 13,438 Ambassador
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    aayush said:
    am 59 years old earn at present 24 thus need to ask if can use the pension to use as deposit on unit for my self
    yes but it would be taxed.  and this would be after it's discounted perhaps due to being taken before your normal retirement date.  So if you need a large sum you might be best taking it over 2 tax years so you don't go into the higher tax bracket.
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  • Brie
    Brie Posts: 13,438 Ambassador
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    And you also need to think about what you're going to live on when you stop working if you no longer have any pension left.
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  • aayush
    aayush Posts: 1,295 Forumite
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    Brie said:
    aayush said:
    am 59 years old earn at present 24 thus need to ask if can use the pension to use as deposit on unit for my self
    yes but it would be taxed.  and this would be after it's discounted perhaps due to being taken before your normal retirement date.  So if you need a large sum you might be best taking it over 2 tax years so you don't go into the higher tax bracket.
    if only allowance figure thus not tax on income?
  • Ayr_Rage
    Ayr_Rage Posts: 1,919 Forumite
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    edited 13 August 2023 at 1:07PM
    As you are already a taxpayer any income from those pensions will be taxed.
  • molerat
    molerat Posts: 33,483 Forumite
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    edited 13 August 2023 at 1:21PM
    If you have already taken the whole of the 25% tax free element then any further withdrawals are subject to tax.  If you are already paying tax on other income then at least 20% tax will be due on any pension payments, how much tax will actually be deducted at source is a whole different story and you may be owed a refund or face a tax bill.  Also taking a taxable withdrawal will trigger the MPAA and limit you to paying no more than £10K pa gross into a money purchase pension in future.
  • Brie
    Brie Posts: 13,438 Ambassador
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    aayush said:
    Brie said:
    aayush said:
    am 59 years old earn at present 24 thus need to ask if can use the pension to use as deposit on unit for my self
    yes but it would be taxed.  and this would be after it's discounted perhaps due to being taken before your normal retirement date.  So if you need a large sum you might be best taking it over 2 tax years so you don't go into the higher tax bracket.
    if only allowance figure thus not tax on income?
    not sure I understand your question.

    If you are earning £24k a year presently and then you take £20k out of a pension you will be taxed at the lower rate on £44k less the yearly allowance.  So taxed on £31,430.  

    If you are earning £24k a year presently and then you take £50k out of a pension you will be taxed (I believe) at the lower rate on £50270 less the yearly allowance.  So taxed on £33,700 at the lower rate.  And taxed at 40% on the other £23,730. 

    That's why you might want to take the money out over 2 or 3 tax years so you stay in the lower tax band.  Be careful about doing so as this might change the amount you can put into any current employment scheme tax free.
    I’m a Forum Ambassador and I support the Forum Team on Debt Free Wannabe and Old Style Money Saving boards.  If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.

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