withdrawing from nest.

cymru1_2

hi everyone i am a bit confused about the amount i am able to withdraw from my nest acount without paying tax i had £9000 in my account and withdrew £2200 and then withdrew another £800 this month no tax was deducted for either of these withdrawals it says 25% is tax free is that each withdrawal or the whole pot but whats a bit more confusing is that they say the total you can take from your pension tax free is £268,275 i need a bit of clarity on this TIA.

Dazed_and_C0nfused

cymru1_2 said:

hi everyone i am a bit confused about the amount i am able to withdraw from my nest acount without paying tax i had £9000 in my account and withdrew £2200 and then withdrew another £800 this month no tax was deducted for either of these withdrawals it says 25% is tax free is that each withdrawal or the whole pot but whats a bit more confusing is that they say the total you can take from your pension tax free is £268,275 i need a bit of clarity on this TIA.

Only you know whether you took tax exempt money or taxable money.

It's possible the £2,200 was tax exempt and the £800 taxable but the emergency code was used meaning no tax was deducted from the first taxable payment.

Depending on what other taxable income you have you could owe tax to HMRC in respect of the £800.

But you need to clarify exactly what you've done really.

Albermarle

25% of the pot can be withdrawn tax free up to a maximum of £268,275. To reach this maximum you would need a pot of > £1Million.
The tax free can be taken in one hit, in stages, or in conjunction with some of the 75% taxable income.
Although not all providers allow all those options. 

Marcon

cymru1_2 said:

hi everyone i am a bit confused about the amount i am able to withdraw from my nest acount without paying tax i had £9000 in my account and withdrew £2200 and then withdrew another £800 this month no tax was deducted for either of these withdrawals it says 25% is tax free is that each withdrawal or the whole pot but whats a bit more confusing is that they say the total you can take from your pension tax free is £268,275 i need a bit of clarity on this TIA.

The £268,275 you mention is the absolute maximum tax free cash someone can take across all their pension arrangements - but you'd need upwards of £1m to do so. Otherwise you, like everyone else, can only take a maximum of 25% of your 'pot'. 

Your first withdrawal of £2,200 was a fraction under the maximum tax free cash you can take in total from a 'pot' of £9,000. Another £50 and you'd have been at the maximum tax free cash you could take, so there must be some other reason the £800 wasn't taxable - maybe you have no other taxable earnings/income in this tax year?

If you have more than one pension, you can almost certainly take tax free from each of those arrangements.