Additional private pension

MouldyOldDough

molerat said:

Which I could then withdraw (tax free) in 2030 - and gain 5 * £720 tax ?

Where did you get that ideas from ?  

As with all DC pensions, on withdrawal 25% is tax free and 75% is taxable.  The gain for a basic rate tax payer would be 5 x £180.  Taking it all in one go though could push you in to a different tax band, that 75% taxable is added to your other income.

Per year?
Or is this sum  based on a one off? 

QrizB

MouldyOldDough said:

molerat said:

Which I could then withdraw (tax free) in 2030 - and gain 5 * £720 tax ?

Where did you get that ideas from ?  

As with all DC pensions, on withdrawal 25% is tax free and 75% is taxable.  The gain for a basic rate tax payer would be 5 x £180.  Taking it all in one go though could push you in to a different tax band, that 75% taxable is added to your other income.

Per year?
Or is this sum  based on a one off? 

Every year that you contribute £2880, based on current tax rates.

MouldyOldDough

QrizB said:

MouldyOldDough said:

molerat said:

Which I could then withdraw (tax free) in 2030 - and gain 5 * £720 tax ?

Where did you get that ideas from ?  

As with all DC pensions, on withdrawal 25% is tax free and 75% is taxable.  The gain for a basic rate tax payer would be 5 x £180.  Taking it all in one go though could push you in to a different tax band, that 75% taxable is added to your other income.

Per year?
Or is this sum  based on a one off? 

Every year that you contribute £2880, based on current tax rates.

Right - so I would gain £720 pa from this (25% tax) per year ?

which is a total of £3600 over the next 5 years (my SP age)

I wish that I had been aware of this decades ago - only my FA did not even mention it !!

QrizB

MouldyOldDough said:

QrizB said:

Every year that you contribute £2880, based on current tax rates.

Right - so I would gain £720 pa from this (25% tax) per year ?

which is a total of £3600 over the next 5 years (my SP age)

I wish that I had been aware of this decades ago - only my FA did not even mention it !!

You can carry on doing this until you are 75.

Dazed_and_C0nfused

MouldyOldDough said:

QrizB said:

MouldyOldDough said:

molerat said:

Which I could then withdraw (tax free) in 2030 - and gain 5 * £720 tax ?

Where did you get that ideas from ?  

As with all DC pensions, on withdrawal 25% is tax free and 75% is taxable.  The gain for a basic rate tax payer would be 5 x £180.  Taking it all in one go though could push you in to a different tax band, that 75% taxable is added to your other income.

Per year?
Or is this sum  based on a one off? 

Every year that you contribute £2880, based on current tax rates.

Right - so I would gain £720 pa from this (25% tax) per year ?

which is a total of £3600 over the next 5 years (my SP age)

I wish that I had been aware of this decades ago - only my FA did not even mention it !!

You would gain £3,600 within your pension in the next 5 years.

If you take the money out of the pension the gain to you will depend on how much tax is due on the taxable element.  Could be £0 tax.  But the tax could also be 20% or more.  

jimi_man

MouldyOldDough said:

QrizB said:

MouldyOldDough said:

molerat said:

Which I could then withdraw (tax free) in 2030 - and gain 5 * £720 tax ?

Where did you get that ideas from ?  

As with all DC pensions, on withdrawal 25% is tax free and 75% is taxable.  The gain for a basic rate tax payer would be 5 x £180.  Taking it all in one go though could push you in to a different tax band, that 75% taxable is added to your other income.

Per year?
Or is this sum  based on a one off? 

Every year that you contribute £2880, based on current tax rates.

Right - so I would gain £720 pa from this (25% tax) per year ?

which is a total of £3600 over the next 5 years (my SP age)

I wish that I had been aware of this decades ago - only my FA did not even mention it !!

I may be misunderstanding this but from your opening post you said that you pay income tax. Which means that you pay in £2880. It gets grossed up to £3600 - an extra £720. However when you take this out , you can take 25% tax free - £900 and the rest is subject to tax. 

So you’re better off by £180 not £720. You’re only better off by £720 if you’re not a taxpayer. 

MouldyOldDough

jimi_man said:

MouldyOldDough said:

QrizB said:

MouldyOldDough said:

molerat said:

Which I could then withdraw (tax free) in 2030 - and gain 5 * £720 tax ?

Where did you get that ideas from ?  

As with all DC pensions, on withdrawal 25% is tax free and 75% is taxable.  The gain for a basic rate tax payer would be 5 x £180.  Taking it all in one go though could push you in to a different tax band, that 75% taxable is added to your other income.

Per year?
Or is this sum  based on a one off? 

Every year that you contribute £2880, based on current tax rates.

Right - so I would gain £720 pa from this (25% tax) per year ?

which is a total of £3600 over the next 5 years (my SP age)

I wish that I had been aware of this decades ago - only my FA did not even mention it !!

I may be misunderstanding this but from your opening post you said that you pay income tax. Which means that you pay in £2880. It gets grossed up to £3600 - an extra £720. However when you take this out , you can take 25% tax free - £900 and the rest is subject to tax. 

So you’re better off by £180 not £720. You’re only better off by £720 if you’re not a taxpayer. 

I am a tax payer - just - I paid £30 income tax last year !!

jimi_man

MouldyOldDough said:

jimi_man said:

MouldyOldDough said:

QrizB said:

MouldyOldDough said:

molerat said:

Which I could then withdraw (tax free) in 2030 - and gain 5 * £720 tax ?

Where did you get that ideas from ?  

As with all DC pensions, on withdrawal 25% is tax free and 75% is taxable.  The gain for a basic rate tax payer would be 5 x £180.  Taking it all in one go though could push you in to a different tax band, that 75% taxable is added to your other income.

Per year?
Or is this sum  based on a one off? 

Every year that you contribute £2880, based on current tax rates.

Right - so I would gain £720 pa from this (25% tax) per year ?

which is a total of £3600 over the next 5 years (my SP age)

I wish that I had been aware of this decades ago - only my FA did not even mention it !!

I may be misunderstanding this but from your opening post you said that you pay income tax. Which means that you pay in £2880. It gets grossed up to £3600 - an extra £720. However when you take this out , you can take 25% tax free - £900 and the rest is subject to tax. 

So you’re better off by £180 not £720. You’re only better off by £720 if you’re not a taxpayer. 

I am a tax payer - just - I paid £30 income tax last year !!

Ok so assuming you’re a taxpayer next year (very likely as the thresholds haven’t changed, but presumably your pension(s) will go up in April) then what I’ve said will apply.