Trigger MPAA?

dodmwe

I don’t need the cash, but it seems logical to take all my remaining tax free cash to invest for growth (transferred to wife who is a non tax payer) as the £268,275 maximum tax free lump sum being frozen at best (cut at worst) creates some fiscal drag as inflation marches on.

i have already taken my DB pension and its the associated DB pension commencement lump sum. 

If I take my 25% tax free DC lump sum (up to maximum of £268,275), but do not drawdown any DC pension, would you be kind to confirm my research that taking a DB lump sum, DB pension and DC lump sump does not trigger MPAA?

I am still working so would like to still contribute to a DC pension, hence the question.

Many thanks in advance.

JoeCrystal

Does your DB pension have LTA percentage from previous tax years? If so you would need to reduce the maximum lump sum accordingly. 

HappyHarry

You are correct that taking a DB lump sum, a DB income and tax free cash from a DC scheme will not trigger the MPAA.

However as @JoeCrystal above points out, your DB pension in payment will reduce the maximum tax free cash you can take from your DC pension.

dodmwe

JoeCrystal said:

Does your DB pension have LTA percentage from previous tax years? If so you would need to reduce the maximum lump sum accordingly. 

I have (this month) taken my a tax free lump sum from my DB pension of £238k, by commuting some of my DB pension benefits.

My current DC pension is valued at £215k, but I cannot take a 25% tax free lump sum because I am limited to a total tax free lump sum of £268,275.

i understand I can only take a lump sum from my DC pension of £30,275.

Can you confirm my understanding is correct?

Many thanks again.

HappyHarry

dodmwe said:

JoeCrystal said:

Does your DB pension have LTA percentage from previous tax years? If so you would need to reduce the maximum lump sum accordingly. 

I have (this month) taken my a tax free lump sum from my DB pension of £238k, by commuting some of my DB pension benefits.

My current DC pension is valued at £215k, but I cannot take a 25% tax free lump sum because I am limited to a total tax free lump sum of £268,275.

i understand I can only take a lump sum from my DC pension of £30,275.

Can you confirm my understanding is correct?

Many thanks again.

Yes that is correct.

But you will need to show your DC provider how much lump sum you have already taken.

JoeCrystal

dodmwe said:

JoeCrystal said:

Does your DB pension have LTA percentage from previous tax years? If so you would need to reduce the maximum lump sum accordingly. 

I have (this month) taken my a tax free lump sum from my DB pension of £238k, by commuting some of my DB pension benefits.

My current DC pension is valued at £215k, but I cannot take a 25% tax free lump sum because I am limited to a total tax free lump sum of £268,275.

i understand I can only take a lump sum from my DC pension of £30,275.

Can you confirm my understanding is correct?

Many thanks again.

Check what is the percent of lifetime allowance used if relevant and then use 25% of that value to reduce the lump sum allowance. Not sure if it applies if taken this tax year though.

Albermarle

dodmwe said:

I don’t need the cash, but it seems logical to take all my remaining tax free cash to invest for growth (transferred to wife who is a non tax payer) as the £268,275 maximum tax free lump sum being frozen at best (cut at worst) creates some fiscal drag as inflation marches on.

i have already taken my DB pension and its the associated DB pension commencement lump sum. 

If I take my 25% tax free DC lump sum (up to maximum of £268,275), but do not drawdown any DC pension, would you be kind to confirm my research that taking a DB lump sum, DB pension and DC lump sump does not trigger MPAA?

I am still working so would like to still contribute to a DC pension, hence the question.

Many thanks in advance.

You have moved a large sum of money from outside your estate to inside it, so potentially making it subject to 40% IHT at some point.
Although this exemption may be changed at some point, partly anyway.