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59 - thinking of taking pension - 100k pot - tax etc

Hi
If I buy an annuity with the cash, it that taxed?  Is the money added to my total income, I earn around 37k.
Thanks

Comments

  • dunstonh
    dunstonh Posts: 118,606 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    If I buy an annuity with the cash, it that taxed?
    You would be an annuity with 75% of the pension.  25% would be paid to you as a lump sum tax free.    The annuity income is paid via PAYE and subject to income tax at your appropriate rate.

     Is the money added to my total income, I earn around 37k.
    Yes.  


    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • dunstonh said:
    If I buy an annuity with the cash, it that taxed?
    You would be an annuity with 75% of the pension.  25% would be paid to you as a lump sum tax free.    The annuity income is paid via PAYE and subject to income tax at your appropriate rate.

     Is the money added to my total income, I earn around 37k.
    Yes.  


    or I could just take the 25% and leave the rest invested - correct?
    Thanks
  • Albermarle
    Albermarle Posts: 26,016 Forumite
    10,000 Posts Sixth Anniversary Name Dropper
    Notebook said:
    dunstonh said:
    If I buy an annuity with the cash, it that taxed?
    You would be an annuity with 75% of the pension.  25% would be paid to you as a lump sum tax free.    The annuity income is paid via PAYE and subject to income tax at your appropriate rate.

     Is the money added to my total income, I earn around 37k.
    Yes.  


    or I could just take the 25% and leave the rest invested - correct?
    Thanks
    The usual basic choices are 
    1) Take it all out as one lump sum ( usually not recommended )
    2) take 25% tax free and buy an annuity with rest
    3) take 25% tax free and keep the rest invested and withdraw regularly from it.
    4) take a mixture of tax free and taxable cash on a regular basis

    If you look at your pension providers website, normally all withdrawal options are explained . Also here.
    Taking your pension | Help with taking your pension | MoneyHelper
    A discussion with Pensionwise is probably a good idea.
  • Marcon
    Marcon Posts: 13,011 Forumite
    Eighth Anniversary 10,000 Posts Name Dropper Combo Breaker
    Notebook said:
    dunstonh said:
    If I buy an annuity with the cash, it that taxed?
    You would be an annuity with 75% of the pension.  25% would be paid to you as a lump sum tax free.    The annuity income is paid via PAYE and subject to income tax at your appropriate rate.

     Is the money added to my total income, I earn around 37k.
    Yes.  


    or I could just take the 25% and leave the rest invested - correct?
    Thanks
    Only if your scheme offers that facility (known as 'drawdown') - and almost all modern contracts do. Check with your provider.
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
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