Flexible drawdown and tax free element

Moonwolf

Can I check something please.

In flexible drawdown can I carry on taking 25% tax free for as long as I have allowance remaining, through to my 90s? Is the only thing to stop me some notional loss of benefit if I die over 75 without taking it all?

I'm planning to drawdown flexibly until I run out of DC pot.  About 50% of the whole DC pot would be a bridge until my DB pensions kick in and the remainder I hope to keep drawing down as money for luxuries until it runs out, probably between 85 and 90 although obviously there is a lot of uncertainty in that.

I'm assuming I'll always be able to take 25% of this tax free. 

Of course this could be stymied because inflation is high enough to mean I breach the lump sum allowance (unlikely even though I don't expect the LSA to increase); or the lump sum allowance is significantly reduced or removed altogether.  I will deal with this if it happens and I won't worry about it before then.

However a lot of people worry about the aged 75 cut off.  Is this just because essentially if you die after 75 and haven't taken it, that tax break is not available to your descendants. i.e. it becomes a lost benefit?

penners324

You're allowed to take 25% of the fund value on the date you chrystalise it.

dunstonh

In flexible drawdown can I carry on taking 25% tax free for as long as I have allowance remaining, through to my 90s? Is the only thing to stop me some notional loss of benefit if I die over 75 without taking it all?

As long as there are uncrystlalised funds, you have access to the 25% no matter how old you are.
Under the proposed 2027 changes, there will be some benefit of removing unused 25% TFC and moving into S&S ISAs (ISAs and pensions share the same investments and charges - so no issue there).

However a lot of people worry about the aged 75 cut off.  Is this just because essentially if you die after 75 and haven't taken it, that tax break is not available to your descendants. i.e. it becomes a lost benefit?

Nothing to worry about.  Its just routine financial planning by using the appropriate tax wrappers at the right time for the right occassion.

Moonwolf

dunstonh said:

In flexible drawdown can I carry on taking 25% tax free for as long as I have allowance remaining, through to my 90s? Is the only thing to stop me some notional loss of benefit if I die over 75 without taking it all?

As long as there are uncrystlalised funds, you have access to the 25% no matter how old you are.
Under the proposed 2027 changes, there will be some benefit of removing unused 25% TFC and moving into S&S ISAs (ISAs and pensions share the same investments and charges - so no issue there).

However a lot of people worry about the aged 75 cut off.  Is this just because essentially if you die after 75 and haven't taken it, that tax break is not available to your descendants. i.e. it becomes a lost benefit?

Nothing to worry about.  Its just routine financial planning by using the appropriate tax wrappers at the right time for the right occassion.

Thank you, just the information I wanted.