Reducing Tax Bill

Sausages65

I am drawing my pension a year early, 59yrs old, and will continue to work. I will use two thirds of my lump sum,£151,000.00, to buy my property outright, leaving me mortage free and with a small pot of savings I have been told that I will get 25% of my lump sum tax free and then go into the higher tax bracket because I will be drawing my pension and working. 
Can I increase the tax exemption on my lump sum because I am buying a property?

maisie_cat

No exemptions for property purchase, although that would be nice
Why not take the tax free lump sum and use as a deposit, then get a loan or mortgage for the balance? that will give you a higher income later on to make payments

Albermarle

Presume this is a Defined Benefit pension, where you have a guaranteed pension income for life?

If so then can I also presume that you took the PCLS ( Pension Commencement Lump Sum ) and therefore a reduced pension ( as opposed to getting the full pension and no lump sum) ?

If both presumptions are correct then the lump sum is all tax free.

If the above presumptions are wrong then it could well be a different scenario, so more details needed.

Ayr_Rage

Normally all of the 25% lump sum from a scheme is tax free.

You will pay tax on your earnings and pension income at the applicable rate.

Buying your property does not make any difference to your tax situation and does not get any relief.

eskbanker

Sausages65 said:

I am drawing my pension a year early, 59yrs old, and will continue to work. I will use two thirds of my lump sum,£151,000.00, to buy my property outright, leaving me mortage free and with a small pot of savings I have been told that I will get 25% of my lump sum tax free and then go into the higher tax bracket because I will be drawing my pension and working. 
Can I increase the tax exemption on my lump sum because I am buying a property?

If taking pension income while still working puts you into higher band tax, is there any mileage in deferring taking the pension until you stop working?  Obviously you'd be paying a mortgage for longer but that may be outweighed by the higher pension income once it starts....