Small Pension Pots

Greenwaves

Hi,

If I had a small pension pot of 12k and have taken the 25% tax free cash (3k), can I still cash in the remaining 9K under the small pots rule without triggering the MPAA?

Many thanks

G

FIREDreamer

Greenwaves said:

Hi,

If I had a small pension pot of 12k and have taken the 25% tax free cash (3k), can I still cash in the remaining 9K under the small pots rule without triggering the MPAA?

Many thanks

G

I think you can - but you need to tell them that you want to use the “small pots” facility and not just make a normal taxable withdrawal.

EDIT: Seems this is not allowed based on later posts below.

Marcon

FIREDreamer said:

Greenwaves said:

Hi,

If I had a small pension pot of 12k and have taken the 25% tax free cash (3k), can I still cash in the remaining 9K under the small pots rule without triggering the MPAA?

Many thanks

G

I think you can - but you need to tell them that you want to use the “small pots” facility and not just make a normal taxable withdrawal.

No. The 'pot' was never small enough to be withdrawn under the small pots rule.

You need to cash in the whole of a small pot in one go and it needs to be under £10K in total (ie including tax free cash) at the time you cash it in. OP has already taken the tax free cash, so the whole of the remaining £9K will be subject to tax and drawing any of it will trigger the MPAA. 

Albermarle

Greenwaves said:

Hi,

If I had a small pension pot of 12k and have taken the 25% tax free cash (3k), can I still cash in the remaining 9K under the small pots rule without triggering the MPAA?

Many thanks

G

I do not think so as effectively you will have made two withdrawals, rather than take the whole pot in one go.
Better wait for more answers though.

Greenwaves

Marcon said:

FIREDreamer said:

Greenwaves said:

Hi,

If I had a small pension pot of 12k and have taken the 25% tax free cash (3k), can I still cash in the remaining 9K under the small pots rule without triggering the MPAA?

Many thanks

G

I think you can - but you need to tell them that you want to use the “small pots” facility and not just make a normal taxable withdrawal.

No. The 'pot' was never small enough to be withdrawn under the small pots rule.

You need to cash in the whole of a small pot in one go and it needs to be under £10K in total (ie including tax free cash) at the time you cash it in. OP has already taken the tax free cash, so the whole of the remaining £9K will be subject to tax and drawing any of it will trigger the MPAA. 

Triggering the MPAA would be a disaster - thanks. What would happen if it was transferred elsewhere and then taken? 

Dazed_and_C0nfused

Greenwaves said:

Marcon said:

FIREDreamer said:

Greenwaves said:

Hi,

If I had a small pension pot of 12k and have taken the 25% tax free cash (3k), can I still cash in the remaining 9K under the small pots rule without triggering the MPAA?

Many thanks

G

I think you can - but you need to tell them that you want to use the “small pots” facility and not just make a normal taxable withdrawal.

No. The 'pot' was never small enough to be withdrawn under the small pots rule.

You need to cash in the whole of a small pot in one go and it needs to be under £10K in total (ie including tax free cash) at the time you cash it in. OP has already taken the tax free cash, so the whole of the remaining £9K will be subject to tax and drawing any of it will trigger the MPAA. 

Triggering the MPAA would be a disaster - thanks. What would happen if it was transferred elsewhere and then taken? 

I'm sure MPAA would still be triggered as it's a crystallised pension which was above £10k.

Marcon

Albermarle said:

Greenwaves said:

Hi,

If I had a small pension pot of 12k and have taken the 25% tax free cash (3k), can I still cash in the remaining 9K under the small pots rule without triggering the MPAA?

Many thanks

G

I do not think so as effectively you will have made two withdrawals, rather than take the whole pot in one go.
Better wait for more answers though.

Why? The legislation is entirely clear, as was my answer! The small pots regime applies only where the whole pot is taken in one go and is under £10K. Googling or looking at other answers on this forum would have confirmed.

Dazed_and_C0nfused said:

Greenwaves said:

Marcon said:

FIREDreamer said:

Greenwaves said:

Hi,

If I had a small pension pot of 12k and have taken the 25% tax free cash (3k), can I still cash in the remaining 9K under the small pots rule without triggering the MPAA?

Many thanks

G

I think you can - but you need to tell them that you want to use the “small pots” facility and not just make a normal taxable withdrawal.

No. The 'pot' was never small enough to be withdrawn under the small pots rule.

You need to cash in the whole of a small pot in one go and it needs to be under £10K in total (ie including tax free cash) at the time you cash it in. OP has already taken the tax free cash, so the whole of the remaining £9K will be subject to tax and drawing any of it will trigger the MPAA. 

Triggering the MPAA would be a disaster - thanks. What would happen if it was transferred elsewhere and then taken? 

I'm sure MPAA would still be triggered as it's a crystallised pension which was above £10k.

Correct - and the whole pot needed to be taken in one fell swoop, so it would fail on that count, too.

Albermarle

Marcon said:

Albermarle said:

Greenwaves said:

Hi,

If I had a small pension pot of 12k and have taken the 25% tax free cash (3k), can I still cash in the remaining 9K under the small pots rule without triggering the MPAA?

Many thanks

G

I do not think so as effectively you will have made two withdrawals, rather than take the whole pot in one go.
Better wait for more answers though.

Why? The legislation is entirely clear, as was my answer! The small pots regime applies only where the whole pot is taken in one go and is under £10K. Googling or looking at other answers on this forum would have confirmed.

Dazed_and_C0nfused said:

Greenwaves said:

Marcon said:

FIREDreamer said:

Greenwaves said:

Hi,

If I had a small pension pot of 12k and have taken the 25% tax free cash (3k), can I still cash in the remaining 9K under the small pots rule without triggering the MPAA?

Many thanks

G

I think you can - but you need to tell them that you want to use the “small pots” facility and not just make a normal taxable withdrawal.

No. The 'pot' was never small enough to be withdrawn under the small pots rule.

You need to cash in the whole of a small pot in one go and it needs to be under £10K in total (ie including tax free cash) at the time you cash it in. OP has already taken the tax free cash, so the whole of the remaining £9K will be subject to tax and drawing any of it will trigger the MPAA. 

Triggering the MPAA would be a disaster - thanks. What would happen if it was transferred elsewhere and then taken? 

I'm sure MPAA would still be triggered as it's a crystallised pension which was above £10k.

Correct - and the whole pot needed to be taken in one fell swoop, so it would fail on that count, too.

Somehow I missed your answer first time around.

FIREDreamer

Marcon said:

FIREDreamer said:

Greenwaves said:

Hi,

If I had a small pension pot of 12k and have taken the 25% tax free cash (3k), can I still cash in the remaining 9K under the small pots rule without triggering the MPAA?

Many thanks

G

I think you can - but you need to tell them that you want to use the “small pots” facility and not just make a normal taxable withdrawal.

No. The 'pot' was never small enough to be withdrawn under the small pots rule.

You need to cash in the whole of a small pot in one go and it needs to be under £10K in total (ie including tax free cash) at the time you cash it in. OP has already taken the tax free cash, so the whole of the remaining £9K will be subject to tax and drawing any of it will trigger the MPAA. 

Are you sure?

Dazed_and_C0nfused

FIREDreamer said:

Marcon said:

FIREDreamer said:

Greenwaves said:

Hi,

If I had a small pension pot of 12k and have taken the 25% tax free cash (3k), can I still cash in the remaining 9K under the small pots rule without triggering the MPAA?

Many thanks

G

I think you can - but you need to tell them that you want to use the “small pots” facility and not just make a normal taxable withdrawal.

No. The 'pot' was never small enough to be withdrawn under the small pots rule.

You need to cash in the whole of a small pot in one go and it needs to be under £10K in total (ie including tax free cash) at the time you cash it in. OP has already taken the tax free cash, so the whole of the remaining £9K will be subject to tax and drawing any of it will trigger the MPAA. 

Are you sure?

Doesn't the second part circled prove MPAA will be triggered?

"as long as the pot represents one complete arrangement only"

Which is £12k in this case, the £3k TFLS plus remaining £9k.

FIREDreamer

Dazed_and_C0nfused said:

FIREDreamer said:

Marcon said:

FIREDreamer said:

Greenwaves said:

Hi,

If I had a small pension pot of 12k and have taken the 25% tax free cash (3k), can I still cash in the remaining 9K under the small pots rule without triggering the MPAA?

Many thanks

G

I think you can - but you need to tell them that you want to use the “small pots” facility and not just make a normal taxable withdrawal.

No. The 'pot' was never small enough to be withdrawn under the small pots rule.

You need to cash in the whole of a small pot in one go and it needs to be under £10K in total (ie including tax free cash) at the time you cash it in. OP has already taken the tax free cash, so the whole of the remaining £9K will be subject to tax and drawing any of it will trigger the MPAA. 

Are you sure?

Doesn't the second part circled prove MPAA will be triggered?

"as long as the pot represents one complete arrangement only"

Which is £12k in this case, the £3k TFLS plus remaining £9k.

But it mentions value as at date of taking the small pot, which is £9k. And it is still a complete (single) arrangement at that time.

I agree this is all ambiguous at best and I am only trying to help.