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Tax relief on current pension contributions when drawing an old pension

Leewurf
Posts: 5 Forumite

I am currently employed with a company pension that me and my employer pay into, approx £1000 per month combined. From a previous employer I have a DB pension which I have just found I can start drawing from - a tax free lump and a small yearly pension. I understand this counts as part of my income and I will be taxed accordingly, but someone has just raised the question of whether drawing from my old pension will affect the tax relief I get on my current pension contributions.
As I understand it I can pay upto £60k per year into my pension tax free, but in certain circumstances this allowance can be drastically reduced if you start drawing, triggering MPAA.
In the quote I received from my old pension, the tax free lump included about £6000 from AVC's which I paid and I believe this part of the 'pot' is classed as Defined Contribution. I've tried making sense of the information online, and even the pension company couldn't really answer or maybe didn't really understand the question.
Can anybody clarify these rules for me?
As I understand it I can pay upto £60k per year into my pension tax free, but in certain circumstances this allowance can be drastically reduced if you start drawing, triggering MPAA.
In the quote I received from my old pension, the tax free lump included about £6000 from AVC's which I paid and I believe this part of the 'pot' is classed as Defined Contribution. I've tried making sense of the information online, and even the pension company couldn't really answer or maybe didn't really understand the question.
Can anybody clarify these rules for me?
0
Comments
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MPAA, is only triggered if you take taxable income from a DC pension.
Tax free cash from DB or DC does not count, and neither does taxable income from a DB pension.
As I understand it I can pay upto £60k per year into my pension tax free,
The £60K limit includes your contributions + tax relief + employers contribution.
As a separate issue, you can only add gross up to your gross salary.0 -
This is sort of where I had got to, just wasn't quite sure about the AVC (DC) component of my tax free lump. Thanks for confirming.0
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