Tax Free Withdraw From Pension

davetheman007007

Is the Tax Free Withdraw From Pension a once only or can do you again in another tax year?

2childmum2

Some pensions have higher tax free sums - DH has just taken 47% tax free from a pension that had it written into the scheme rules.
I don't know how common that is though

Marcon

davetheman007007 said:

Is the Tax Free Withdraw From Pension a once only or can do you again in another tax year?

[Quoted post removed by Forum Team]

That's hugely misleading. See https://www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/lump-sum-allowances-for-pensions

Linton

To try to make it clearer .

davetheman007007 said:

Is the Tax Free Withdraw From Pension a once only or can do you again in another tax year?

In answer to the original question: If you take 25% tax free out in year 1 and dont pay more into your pension then you cannot ever take out any more tax free.

Broader explanation...

When you take out a tax free sum the corresponding taxable amount is categorised as "Crystalised" and you cannot take out any more tax free money from it. You can only take taxable money from a crystalised pot.

New contributions are categorised as "uncrystalised" and up to 25% is available for a tax free payment.

So you can make life quite complicated. For example

If you have a £100K pension pot.  In year 1 you choose to take out £15K tax free.  That is 25% of a pension value of £60K.  That leaves £60K-£15K=£45K crystalised, £100K-£60K=£40K uncrystalised and £15K in your pocket.

At any time you can subsequently withdraw 25% of £40K=£10K tax free.

If you then contribute another £50K you still have £45K Crystalised but now have £40K+£50K uncrystalised.

Two points:
1) Tax years are irrelevent.
2)  The pension provider, particularly if it's an employer scheme, may not allow you the full flexibility described above.

dunstonh

2childmum2 said:

Some pensions have higher tax free sums - DH has just taken 47% tax free from a pension that had it written into the scheme rules.
I don't know how common that is though

It's known as protected tax free cash and is not uncommon.   Mainly on hybrid schemes from before 2006 and legacy plans that had higher than 25% before 2006.    

I have seen 100% tax free cash quite often.  Mainly through the B&CE holiday pay scheme (using its old name)  and a local employer that had entitlement built up on a hybrid scheme where most older employees have that entitlement.

Albermarle

davetheman007007 said:

Is the Tax Free Withdraw From Pension a once only or can do you again in another tax year?

This site is useful and you can book a free chat with PensionWise.
It is all Govt funded so they will not try to sell you anything.
Help with taking your pension | MoneyHelper

dunstonh

Albermarle said:

davetheman007007 said:

Is the Tax Free Withdraw From Pension a once only or can do you again in another tax year?

This site is useful and you can book a free chat with PensionWise.
It is all Govt funded so they will not try to sell you anything.
Help with taking your pension | MoneyHelper

Just a small correction. It's not government-funded.  A levy on regulated financial services companies and pension schemes funds it.  
Indeed, the FCA just updated their levies calculator to final rates for 25/26

RogerPensionGuy

Just posting a link below reference the B&CE holiday pay scheme information posted above, it's very informative.

***

https://en.m.wikipedia.org/wiki/B&CE?hl=en-GB