Tax on pension pots.

jeff_chandler

Hi all. 
Both myself are in our lat 60s and both retired.
After I have taken 25%  from my pension pots I have in total of 87000. We are looking to move house and need another 8000 to make sure. Roughly what would i pay in tax on 87000. 
We're currently in a terraced property but would like a Bungalow. 
Kind regards Jeff. 

Brie

Do you mean you have take the tax free lump sum from your pension?  If so there is no tax.

If you mean something else then the £87k would attract the same tax level as your other income and then ramp up at the different levels.  So - 

Band	Taxable income	Tax rate
Personal Allowance	Up to £12,570	0%
Basic rate	£12,571 to £50,270	20%
Higher rate	£50,271 to £125,140	40%
Additional rate	over £125,140	45%

So at  least some of your £85k will be above 40%.

Dazed_and_C0nfused

jeff_chandler said:

Hi all. 
Both myself are in our lat 60s and both retired.
After I have taken 25%  from my pension pots I have in total of 87000. We are looking to move house and need another 8000 to make sure. Roughly what would i pay in tax on 87000. 
We're currently in a terraced property but would like a Bungalow. 
Kind regards Jeff. 

Hello Jeff.

It could be anywhere from ~£22k to well over £50k.

But without knowing what other taxable income you have then it's impossible to know.

There is a strong chance you would pay the smallest amount overall by splitting it across two tax years.

Or do you really mean what tax might be due on £8k?

Albermarle

If you only need £8K, why would you take the whole £87K out ??

jeff_chandler

Thanks for the replies.
I had more than I first thought. 
I can draw £32000 tax free from my pension policies and also wanted to draw the full £39000 from a Personal investment plan. All these policies are with Scottish widows, just both the pension and the PIP are different departments. 
I phoned Scottish Widows today but no one could actually tell me what tax implications would be on the PIP £39000. The 25% pension will be tax free but taken together would the £32000 along with the PIP £39000 be taxed at 40%. I have been on the HRMI web site but there's no information regarding tax on savings. Prior the war in Ukraine the value was £54000, such is the loss. 
Jeff

eskbanker

jeff_chandler said:

The 25% pension will be tax free but taken together would the £32000 along with the PIP £39000 be taxed at 40%.

The £32K wouldn't be "taken together" with the £39K, as it's tax-free.