Pension Transfer Value

tsmiggy54

Dazed_and_C0nfused said:

tsmiggy54 said:

Thank you for that.

I would want a full lump sum. Luckily i am managing fine, but my older grandson is not. I am not on means tested benefits. I am just a little confused about the amount, i am likely to get, and the relationship with its transfer value. 

Don't forget that 75% will be taxable so that is something to consider, especially if taking it all in one go will push you into a higher tax bracket.

If i decided to take the lump sum, which i may well do. Would i be taxed at source, or would they pay the full amount, and then i sort out the tax, when doing my Self Assessemnt. At the moment, my income is State Pension, plus a small income of £3500 from a shared rental property. So would i be taxed at 20% 

Thanks. 

MallyGirl

you may well be taxed at an emergency rate and have to claim back the excess (or wait for it to arrive after the end of the tax year). They will not let you sort out the tax later.

tsmiggy54

MallyGirl said:

you may well be taxed at an emergency rate and have to claim back the excess (or wait for it to arrive after the end of the tax year). They will not let you sort out the tax later.

Thank you for that. To be honest it is a small pension, that i have paid into once i started self employment. So i do not know what the pension would be defined as. It was a old Freinds Provident pension, then became Aviva. Maybe a need some advice, as i find it all somewhat confusing. As clear as mud so to speak lol. Once again Thanks

xylophone

You could book a Pension Wise interview.

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise/book-a-free-pension-wise-appointment


By way of example, suppose John Brown's only income is a state pension of  £12,000 a year plus a share of the rental income of a

property he  and his brother own and let out. His share is £4000 a year.

 His total income is £16,000 a year and this makes him a basic rate tax payer.

John has a small money purchase pension valued at £ 20,000 and he decides that he wants to take the full value and close the plan.

He may take £5000 tax free as a pension commencement lump sum but the balance (£15,000) is taxable income.

In his circumstances, he is liable for tax at 20% on that income.

However, the pension company is likely to tax that income on the basis that he is going to receive £20,000 a month for the rest of

the tax year  - therefore John will have paid too much tax on  that income.

John will be able to reclaim the tax by completing form 53Z.

https://www.gov.uk/guidance/claim-back-tax-on-a-flexibly-accessed-pension-overpayment-p55