proceeds from investing pension tax-free lump sum in a fixed-rate saving account

mikeF000

hi, i intend to reinvest (not in another pension though) my pension lump sum, but didnt know if the interest i would make would be considered taxable ?. 

NoMore

Yes the interest would be considered taxable, unless you are using an ISA.

ali_bear

You can buy premium bonds up to 50k, the prizes are not taxable. 

You can put up to 20k per year into an ISA. 

Shadyocuk

Once you have taken money out of a pension then it is treated exactly the same as any other money you might have.

Albermarle

Shadyocuk said:

Once you have taken money out of a pension then it is treated exactly the same as any other money you might have.

As above, once you receive it in your bank account, it is just the same as any other money in there. 

dunstonh

mikeF000 said:

hi, i intend to reinvest (not in another pension though) my pension lump sum, but didnt know if the interest i would make would be considered taxable ?. 

Also, remember that not taking the lump sum or a reduced lump sum is often the financially better option with many pensions.   

Also, the ability to pay back into a pension each year is very efficient and can effectively result in free money.

Pat38493

mikeF000 said:

hi, i intend to reinvest (not in another pension though) my pension lump sum, but didnt know if the interest i would make would be considered taxable ?. 

Yes it is taxable, but depending on your situation you may have an allowance available where you don’t pay any tax up to a certain limit.  This depends on your overall tax situation.  For example, if you are a basic rate taxpayer, you can earn up to £1000 of savings interest each year without paying tax.

As others have said, you can avoid this by drip feeding the amount into an ISA account at the rate of £20K per year.  Savings interest (or any other gain) on ISAs is not taxable in any way (unless you die).