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DB Pension Transfer Compensation Tax Treatment
bonnyrigger
Posts: 111 Forumite
Have received an offer of 61k as compensation on a transfer from 2017. The company have already deducted 20% tax to get this figure and I have the option to take cash or get it paid into a pension.
My AA usage has plenty of spare capacity (think it was just over 30% last 2 years), so thinking of opening a new SIPP and dumping it all in there. I can then whip out 15k tax free and start taking the rest when I retire next year.
As I'm just in the HR tax bracket in Scotland if I take this as cash i think I'm looking at a tax bill of about 14k assuming i work all year, so the new SIPP would seem a no brainer.
Would I also get TR added to the 60k, i.e. get back the 20% they have already deducted?
Any thoughts on above welcome.
My AA usage has plenty of spare capacity (think it was just over 30% last 2 years), so thinking of opening a new SIPP and dumping it all in there. I can then whip out 15k tax free and start taking the rest when I retire next year.
As I'm just in the HR tax bracket in Scotland if I take this as cash i think I'm looking at a tax bill of about 14k assuming i work all year, so the new SIPP would seem a no brainer.
Would I also get TR added to the 60k, i.e. get back the 20% they have already deducted?
Any thoughts on above welcome.
:beer::beer::beer:
0
Comments
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Thanks for getting back, the actual wording is "Net redress after adjustment for basic rate tax." But as any additional money I get after my wages this year will be taxed at HR, I assumed I'd need to pay the difference between BR and HR and that's where I got the 14k tax bill.
Be easier if I could have delayed this until I'd retired but letter says I have to respond within 3 months.:beer::beer::beer:0 -
https://adviser.royallondon.com/technical-central/pensions/contributions-and-tax-relief/compensation/
Found this on RL Adviser site, looks like the compensation payment for poor advice is non-taxable up to 500k.
:beer::beer::beer:0
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