LGPS + AVC: 25% tax free limit

FIREDreamer

Random47 said:

Silvertabby said:

seans_elysees said:

I’m in LGPS and also contribute a decent amount to AVC. I understand that I can take the AVC 100% tax free if I take it at the same time as LGPS as long as:

1) It doesn’t make up more than 25% of combined LGPS+AVC value. 

2) Limited to £268k max. ? 

 

Yes, that's your limit across all pensions.  Each pension provider, including the LGPS, will ask you for details of your other pensions so they don't bust the tax free limit. 

If your LGPS AVC does exceed the (total) limit, then you could use the excess to buy additional fully index linked LGPS benefits.

Slight thread hijack:

What if you have had previous small pot payments. For example accessed 3 x £10K small pots in previous years. All of which have had the 25% tax free benefit applied. Does your tax free maximum of £268K reduce by a relative amount?

No, small pot tax free cash is in addition to the £268,275 lump sum allowance.

Random47

FIREDreamer said:

Random47 said:

Silvertabby said:

seans_elysees said:

Slight thread hijack:

What if you have had previous small pot payments. For example accessed 3 x £10K small pots in previous years. All of which have had the 25% tax free benefit applied. Does your tax free maximum of £268K reduce by a relative amount?

No, small pot tax free cash is in addition to the £268,275 lump sum allowance.

Luvly Jubbly, nice to know. Cheers

seans_elysees

FIREDreamer said:

Random47 said:

Silvertabby said:

seans_elysees said:

I’m in LGPS and also contribute a decent amount to AVC. I understand that I can take the AVC 100% tax free if I take it at the same time as LGPS as long as:

1) It doesn’t make up more than 25% of combined LGPS+AVC value. 

2) Limited to £268k max. ? 

 

Yes, that's your limit across all pensions.  Each pension provider, including the LGPS, will ask you for details of your other pensions so they don't bust the tax free limit. 

If your LGPS AVC does exceed the (total) limit, then you could use the excess to buy additional fully index linked LGPS benefits.

Slight thread hijack:

What if you have had previous small pot payments. For example accessed 3 x £10K small pots in previous years. All of which have had the 25% tax free benefit applied. Does your tax free maximum of £268K reduce by a relative amount?

No, small pot tax free cash is in addition to the £268,275 lump sum allowance.

If you were choosing to play that to your advantage (if there was any possibility of hitting lifetime allowance) - would that mean that it could be worthwhile creating 3x small pots up to 10k in the years immediately prior to retirement? Rather than further adding to larger SIPP pots.