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Tax after taking a lump sum following monthly drawdown?

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This discussion was created from comments split from: It's time to start digging up those Squirrelled Nuts!!!!.

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  • I_want_to_break_free
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    Hi, I'm looking for some information. 

    I've been using monthly drawdown (i.e. crystallise a sum each month) and have been doing so for last couple of years.  My plan is to continue to do so for next few years until my final salary and state pension kick in. 

    I've no specific needs / plans for any lump sum so plan to take my full final salary pension rather than a reduced amount in return for a lump sum.

    However, if I did take a lump sum, what would the tax position be as I've crystallised benefits (albeit only a small percentage of the LTA) prior to 6 April 2024?  Any information on this or signposting to a useful resource would be appreciated.  Thanks


  • MallyGirl
    MallyGirl Posts: 6,747 Senior Ambassador
    First Anniversary Photogenic Name Dropper First Post
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    Hi, I'm looking for some information. 

    I've been using monthly drawdown (i.e. crystallise a sum each month) and have been doing so for last couple of years.  My plan is to continue to do so for next few years until my final salary and state pension kick in. 

    I've no specific needs / plans for any lump sum so plan to take my full final salary pension rather than a reduced amount in return for a lump sum.

    However, if I did take a lump sum, what would the tax position be as I've crystallised benefits (albeit only a small percentage of the LTA) prior to 6 April 2024?  Any information on this or signposting to a useful resource would be appreciated.  Thanks


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  • zagfles
    zagfles Posts: 20,491 Forumite
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    Nothing, unless your lump sum minus the tax free element of what you've crystallised so far gets close to the £268k limit. You'll need to declare to your DB scheme the amount of LTA/LSA you've used so far. 
  • Albermarle
    Albermarle Posts: 23,043 Forumite
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    The % of LTA already used is now the % of the Lump Sum Allowance ( LSA) .

    So if you used 10% of the LTA before you have now used 10% of the LSA . So you can still take 90% of the LSA limit in future ( if you have a big enough pensions to get near it of course) .
    If you now take a DB scheme but with no lump sum it will add 0% to your LSA ( whereas it would previously have added to your LTA)
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