Salary Sacrifice, Pension, and Pension Draw Down

A.leMan

Hello,

Hope someone can help. As I have reached the age where small pensions from old employers have started to pay out, and I just need to understand how much I can take annually from my draw down pot without putting myself into the 40% tax bracket.

I am employed, with an annual salary of £40,000, of which I have a salary sacrifice of £6,900 for a car. I have a previous employer pension of £1900, and £20,000 in a drawdown account, after taking the tax free lump sum.

Now, for taxable income purposes, is my total annual income £41,900 or £35,000? That will have a bearing on how much I can draw down before hitting the £50K 40% threshold. 

I've been working on the assumption that it is the Gross salary pre salary deduction that applies, meaning I can take £8,000 this year.

Regards

Tony

Phoenix72

Is there any taxable benefits in kind in relation to the car or any other BIKs you get?

Albermarle

How much are you currently putting into your workplace pension, and by what method? also salary sacrifice?

Normally it is not recommended to take pensions whilst still working, unless you have other provision for retirement income when you stop work ?

Brie

be careful too about taking drawdown as I believe that affects how much you can contribute to your current occupational pension tax free.  Not a problem if they are DB pensions of course as drawdown isn't possible but I wouldn't take those if they put me in a higher tax bracket.  

Albermarle

Brie said:

be careful too about taking drawdown as I believe that affects how much you can contribute to your current occupational pension tax free.  Not a problem if they are DB pensions of course as drawdown isn't possible but I wouldn't take those if they put me in a higher tax bracket.  

Yes, good point. Once one penny of taxable income is taken from a DC pension, then for evermore the max that can be added to a pension is £10K pa, including all employee & employer contributions and any tax relief added.