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Is this correct?

harryajh
Posts: 24 Forumite


so a friend of mine aged 63 who hasn't worked for several years receives a pension payment of about £130 per month and has another Pension totalling £4k which she wants to cash in.
I THINK because her total income for the year would be way below £12750, she can do this without paying any Tax - is this right?
I THINK because her total income for the year would be way below £12750, she can do this without paying any Tax - is this right?
1
Comments
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If her total income is below her personal allowance then she will not be due any tax on that income. Tax though will most likely be deducted by the pension co on any payment above £1048 taxable and would need reclaiming. Depending on the type of pension that tax deduction may be avoided though.
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Provided she doesn't ever intend to work there it's fine. If she should feel there is a possibility of going back to work and starting a new pension, she could be best to take it as a "small pot" (specific terminology) as that doesn't trigger the MPAA.That's because although she wouldn't be subject to tax as it's under the personal allowance, 75% of the sum is potentially taxable. Taking any of that 75% as a normal drawdown would trigger MPAA I think.0
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Yes, the Personal allowance is still about 12570.3000/6000 emergency fund
160/600 sinking fund0 -
many thanks for the answers, I guessed that would be the case, will pass it on
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