Tax increase when withdrawing from private pension

9414

I'm thinking of closing my private pension, withdrawing all the money and putting it into an ISA before the new government increases the rate to 40% as it seems they are going to.  I will loose money to tax but at 20% and not 40%.  Can anyone see any drawbacks to this?

Dazed_and_C0nfused

9414 said:

I'm thinking of closing my private pension, withdrawing all the money and putting it into an ISA before the new government increases the rate to 40% as it seems they are going to.  I will loose money to tax but at 20% and not 40%.  Can anyone see any drawbacks to this?

You clearly have inside knowledge.

Could you share where you discovered tax on pension income will be 40% across the board 🤔

flaneurs_lobster

9414 said:

I'm thinking of closing my private pension, withdrawing all the money and putting it into an ISA before the new government increases the rate to 40% as it seems they are going to.  I will loose money to tax but at 20% and not 40%.  Can anyone see any drawbacks to this?

An ISA? Why not go for broke and just convert all your assets to tinned food and shotgun cartridges. 

Seems to be the only thing that will save you from the Labour Government Budget Zombie Apocalypse.

tacpot12

I think you have misunderstood the potential for change. There is no way that the government will change the income tax rate on pension income to 40%. It will remain the same as other income.  

What has been mooted is that income tax relief for contributions into pensions might be capped at 20%, so that when a higher earner puts money into their pension scheme they don't get more money put into their pension by the government than a basic rate tax payer would.  

9414

I clearly have misunderstood the intention to raise the tax.  Thanks for clarification

Hoenir

Until the budget the endless pointless speculation will continue. 

tacpot12

The Telegraph has a lot to answer for with its scaremongering. It's not like it isn't already very hard to get people to save for their retirement, without them stoking the fear that it might not be worth it.

As someone who retired at 53 as a result of an early and largely accidental investment in a personal pension, I can say that it was a very worthwhile thing to do, even in spite of subsequent government meddling.

booneruk

tacpot12 said:

The Telegraph has a lot to answer for with its scaremongering. It's not like it isn't already very hard to get people to save for their retirement, without them stoking the fear that it might not be worth it.

Hear! hear! They are terrible. Every day there's a new PENSION RAID warning. They appear to be willingly trying to scare their readership. If you believed everything they wrote you'd fear your entire pension pot could be 'raided' by an evil chancellor, rather than any likely change affecting future contributions only, or the 25% TFLS.

We'll just have to wait and see. The sooner this budget is done and dusted, the better. This forum is littered right now.

Albermarle

booneruk said:

tacpot12 said:

The Telegraph has a lot to answer for with its scaremongering. It's not like it isn't already very hard to get people to save for their retirement, without them stoking the fear that it might not be worth it.

Hear! hear! They are terrible. Every day there's a new PENSION RAID warning. They appear to be willingly trying to scare their readership. If you believed everything they wrote you'd fear your entire pension pot could be 'raided' by an evil chancellor, rather than any likely change affecting future contributions only, or the 25% TFLS.

We'll just have to wait and see. The sooner this budget is done and dusted, the better. This forum is littered right now.

I agree. As normal the Govt has been managing expectations, by hinting that dramatic changes are needed. Then when the actual  measures are announced they do not sound so bad.
However they have probably gone a bit OTT on this, and of course the DT et al have been stoking things up as well.
Maybe a few more soothing noises from Starmer/Reeves would help.

DairyQueen

Albermarle said:

booneruk said:

Maybe a few more soothing noises from Starmer/Reeves would help.

Lol. I mean.... really. Soothing noises from the anti-businesss/anti-private sector brigade. Are you kidding?

flaneurs_lobster

DairyQueen said:

Albermarle said:

booneruk said:

Maybe a few more soothing noises from Starmer/Reeves would help.

Lol. I mean.... really. Soothing noises from the anti-businesss/anti-private sector brigade. Are you kidding?

We'd like to remind Forumites to please avoid political debate on the Forum.

I know you're not "debating politics" but I'm pretty sure the rules prohibit generic personal attacks on politicians.