Pension tax free cash to ISA

fuelcrusher

pterri said:

I’m not in the £1m bracket but my DB is valued close and with the linked AVCs (£140kish) then I’ll be in a similar position. I’m thinking along the same lines as you, I’ll have to put it in a GIA and deal with the capital gains hassle but intend to transfer into my isa as soon as possible. 

I can't see any advantage in moving it to a GIA first, not saying there isn't. I'll be leaving it in the pension and just moving it in batches over the years.

NoMore

I think pterri's problem might be because its with a DB pension, they get all the tax free cash at the same time, they can't choose to draw it over a number of years.

UrbanAchiever

Yorkie1 said:

Can I just check the figure in the pension? You've written there is £1,130,000 (£1.3million) in the pension. Did you mean £113,000 instead?

£1,130,000 isn't £1.3m.  It's closer to £1.1m.

FIREDreamer

fuelcrusher said:

I've just come across a thread on another site about taking tax free cash from a pension and moving it into ISAs.

My situation is with circa £1130000 currently in my workplace pension and Sipp I'm already knocking on the door of maxing the tax free cash available. Still a couple of years till I turn 55.

The advantage seems to be taking it out of the pension and putting it in an ISA allows it to continue to grow tax free, while leaving it in the pension means the growth (above 273k) would become taxable.

Any downsides?

I'm aware it'd need doing over a few years, £40k each year split between the wifes and my own ISA.

Apologies if this has already been discussed in this forum.

As you have more than £1,073,100 not only have you knocked on the door, you have gone straight through. 😃

Yorkie1

UrbanAchiever said:

Yorkie1 said:

Can I just check the figure in the pension? You've written there is £1,130,000 (£1.3million) in the pension. Did you mean £113,000 instead?

£1,130,000 isn't £1.3m.  It's closer to £1.1m.

D'oh! yes of course *facepalm*

leosayer

The article linked explains how you can build up an ISA entitlement in the financial years before you can actually fill it. 

Might be of help.

https://monevator.com/should-you-borrow-to-fill-your-isa-each-year/

EdSwippet

fuelcrusher said:

I can't see any advantage in moving it to a GIA first, ...

A slightly better tax outcome? For a given tax bracket, the current CGT and dividend tax rates that you would pay on gains that occur inside a GIA are lower than the income tax rates you would pay on withdrawal of those same gains from within a pension.

NoMore

EdSwippet said:

fuelcrusher said:

I can't see any advantage in moving it to a GIA first, ...

A slightly better tax outcome? For a given tax bracket, the current CGT and dividend tax rates that you would pay on gains that occur inside a GIA are lower than the income tax rates you would pay on withdrawal of those same gains from within a pension.

They are talking about the tax free cash, When has that been subject to income tax ? Fuelcrusher was working under the assumption it was a DC pension and as such you could pull the tax free cash over several years, but Pterri's TFLS is from a DB and as such comes all at once and is bigger than the ISA allowance, hence putting it in GIA to presumably transfer to ISA every year.

fuelcrusher

FIREDreamer said:

fuelcrusher said:

I've just come across a thread on another site about taking tax free cash from a pension and moving it into ISAs.

My situation is with circa £1130000 currently in my workplace pension and Sipp I'm already knocking on the door of maxing the tax free cash available. Still a couple of years till I turn 55.

The advantage seems to be taking it out of the pension and putting it in an ISA allows it to continue to grow tax free, while leaving it in the pension means the growth (above 273k) would become taxable.

Any downsides?

I'm aware it'd need doing over a few years, £40k each year split between the wifes and my own ISA.

Apologies if this has already been discussed in this forum.

As you have more than £1,073,100 not only have you knocked on the door, you have gone straight through. 😃

You're right, I don't know why I had an extra 100k in my head.

fuelcrusher

NoMore said:

EdSwippet said:

fuelcrusher said:

I can't see any advantage in moving it to a GIA first, ...

A slightly better tax outcome? For a given tax bracket, the current CGT and dividend tax rates that you would pay on gains that occur inside a GIA are lower than the income tax rates you would pay on withdrawal of those same gains from within a pension.

They are talking about the tax free cash, When has that been subject to income tax ? Fuelcrusher was working under the assumption it was a DC pension and as such you could pull the tax free cash over several years, but Pterri's TFLS is from a DB and as such comes all at once and is bigger than the ISA allowance, hence putting it in GIA to presumably transfer to ISA every year.

Yes, my questions regarding any downsides to this transfer from pension tax free money to ISA was regarding DC pension, sorry if I wasn't clear.