25% tax free?

bjorn_toby_wilde

Seanster said:

If you take tax free monies and then increase your pension contributions significantly you will fall foul of pension recycling rules. 

This is a bit of an old chestnut on here and if you search the forum for pension recycling you’ll find that it’s not nearly as clear cut as you might think.

That said, there is no way that what the OP is suggesting qualifies as pension recycling.

KTMlad70

af1963 said:

Looks like a pretty high interest rate on the mortgage ?  If there's 50k outstanding and it will take 3 years to pay off at 1600 per month ( £19k per year), that seems to be just under 10% annual interest rate on the outstanding balance?  If that's the case, paying it off would probably make sense.

Cheaper mortgage might be another option though.

It was the best option from Santander when we fixed it for the next 3 years a couple of months back, it was closer to £60k then, 

KTMlad70

bjorn_toby_wilde said:

Seanster said:

If you take tax free monies and then increase your pension contributions significantly you will fall foul of pension recycling rules. 

This is a bit of an old chestnut on here and if you search the forum for pension recycling you’ll find that it’s not nearly as clear cut as you might think.

That said, there is no way that what the OP is suggesting qualifies as pension recycling.

No I just want to be mortgage free    

Grumpy_chap

KTMlad70 said:

I am 55, have 1 pension pot
, I will continue to put in £2k a month to it

This is, of course, limited to the amount of earned income you have.

GunJack

Maybe a better solution if your current (works?) pension allows partial transfers out.....

1. Set up a sipp and transfer out all but a couple of £k from your works pension into it 

2. Take the 25% tfls from the new pension, pay the mortgage, and then leave that new pension to grow with no further contributions.

3. Continue to sal sac into your (now depleted) works pension while you continue working. This will then allow you another 25% tfls when you come to retire from the works pension.

4. Once retired, transfer the rest of the works pension to the sipp to have everything in one place to drawdown from for your retirement income. Both will be crystallised funds so no messy admin issues, and all withdrawals will be taxed at your marginal rate.

If you take the 25pct from the existing works pension you won't get another go. But if you have the extra pension account you can as it's 25pct of EACH pension pot you have.

Just a thought.....

Seanster

bjorn_toby_wilde said:

Seanster said:

If you take tax free monies and then increase your pension contributions significantly you will fall foul of pension recycling rules. 

This is a bit of an old chestnut on here and if you search the forum for pension recycling you’ll find that it’s not nearly as clear cut as you might think.

That said, there is no way that what the OP is suggesting qualifies as pension recycling.

Seanster said:

bjorn_toby_wilde said:

Seanster said:

If you take tax free monies and then increase your pension contributions significantly you will fall foul of pension recycling rules. 

This is a bit of an old chestnut on here and if you search the forum for pension recycling you’ll find that it’s not nearly as clear cut as you might think.

That said, there is no way that what the OP is suggesting qualifies as pension recycling.

Yup. My bad. Misread op. Late at night! 

I should have said MAY be guilty, quite a few "steps" (five) in the flow chart to go thru to be "guilty"! And I've seen no  evidence anyone has been caught, always a 1st tho.

bjorn_toby_wilde

I don’t think HMRC actually publish any stats on the number of people caught, but as you say, the bar is quite high. It would be quite difficult to prove.

Dazed_and_C0nfused

bjorn_toby_wilde said:

I don’t think HMRC actually publish any stats on the number of people caught, but as you say, the bar is quite high. It would be quite difficult to prove.

I think the FOI request referred to here suggests there have been breaches identified.  But maybe I'm reading too much into the way the response is phrased?

https://international-adviser.com/uk-taxman-cannot-disclose-pension-recycling-data/