Deciding when to retire

dave23

I am 62 in January and thinking of retiring sometime next year. I have just had a forecast to take my DB at 62 £9187 or at 65 NRA £10626. Current take home pay is £2111 a month.

If I stopped work at the end on March I have worked out if take £16760 UFPLS from my SIPP in April and pay no tax and then put my DB into payment I would have the equivalent of £2009 a month so not much difference to working and I wouldn't be driving 60 miles round trip to work so I would be saving on fuel. Does my calculation look sound, have I missed something?

I have enough as cash in my SIPP to take £16760 a year for the next 5 years until my state pension and then I have other pension assets to draw down from 67

If I carried on working until later in the year June/July how could I take an UFPLS to minimise the amount of tax I would pay? How could I work out how much tax I would pay?

QrizB

dave23 said:

I am 62 in January and thinking of retiring sometime next year. I have just had a forecast to take my DB at 62 £9187 or at 65 NRA £10626. Current take home pay is £2111 a month

Which is about £32k pa before tax and NI? £2670 a month? And you have no other taxable income?

dave23 said:

If I carried on working until later in the year June/July how could I take an UFPLS to minimise the amount of tax I would pay? How could I work out how much tax I would pay?

Assuming you're paid monthly, on the last day of the month, by your June payday you'll have earned three months salary, £8k. You'll have about £4.5k of tax-free allowance left.

By your July payday you'll have earned four months salary, £10.7k. You'll have less than £2k left.

Dazed_and_C0nfused

dave23 said:

I am 62 in January and thinking of retiring sometime next year. I have just had a forecast to take my DB at 62 £9187 or at 65 NRA £10626. Current take home pay is £2111 a month.

If I stopped work at the end on March I have worked out if take £16760 UFPLS from my SIPP in April and pay no tax and then put my DB into payment I would have the equivalent of £2009 a month so not much difference to working and I wouldn't be driving 60 miles round trip to work so I would be saving on fuel. Does my calculation look sound, have I missed something?

I have enough as cash in my SIPP to take £16760 a year for the next 5 years until my state pension and then I have other pension assets to draw down from 67

If I carried on working until later in the year June/July how could I take an UFPLS to minimise the amount of tax I would pay? How could I work out how much tax I would pay?

I think you are getting your thread title and content mixed up!

By taking £16,760 UFPLS you are paying more tax than you need to (assuming your thread title is what's important).

You would need to reduce the £16,760 down to £4,510 to minimise the tax.

If you worked until June/July then I would be assuming you couldn't take anything out using UFPLS.  You would to limit yourself to just taking a TFLS.

Obviously if minimising tax isn't that important all the above is probably wrong!

dave23

Ok title of thread edited. Currently earn £32600 which after tax and salary sacrifice pension contribution is £2111 a month . If I retire at the end of March and then in the new tax year can I not take £16760 tax free by UFPLS. 25% tax free plus personal allowance?

af1963

If you wanted to continue working in the new tax year, but take a larger UFPLS, you could increase your salary sacrifice so that your taxable earnings from work was less, but you put more into your pension, tax and NI free. 

QrizB

dave23 said:

If I retire at the end of March and then in the new tax year can I not take £16760 tax free by UFPLS. 25% tax free plus personal allowance?

Yes you can.

dave23 said:

If I ... then put my DB into payment

You'll then pay 20% income tax on your £9187 DB pension, as you'll have no spare personal allowance, leaving £7350.

Total take-home for the year will be £16760 + £7350 = £24110, £2009 a month.

dave23

Thank you QrizB so I can retire in March with approx the same per month as when working. If I work a few months more then I will pay more tax from whatever sum I withdraw but I wont need to withdraw as much as will have had x number of months salary