Taking TFLS. Rest is invested?

deepam

Hi,

I am taking entire TFLS next week. Does this mean the rest of 75% is considered as a drawdown pot?

If yes then how does it different from current 100% invested?
What are they key differences - please explain I am totally blank

Thanks

QrizB

deepam said:

I am taking entire TFLS next week. Does this mean the rest of 75% is considered as a drawdown pot?

Yes.

deepam said:

If yes then how does it different from current 100% invested?

If you've not asked your provider to change your investments, they won't. It'll just be 25% smaller.

DRS1

You'll need to sell enough of your investments to have the cash needed to pay the 25% TFLS.

If you have only invested in one thing that is easy otherwise you need to decide what you want to sell.

LHW99

a) The remaining 75% is crystallised after taking the TFLS, and is then all taxable at your normal rate (0%, 20%, etc).

b) Before you take the TFLS, the 100% is uncrystallised.

Any increase in the value of a) will also all be taxable when you withdraw it - no more tax-free money.

In b) any increase in value of the 100% results in an increased 25% for a TFLS when eventually taken, with the (larger) residual 75% taxable. Or of course, in the case of a crash, both numbers would get smaller!

SVaz

Presumably you’ve sold only enough investments to pay your TFLS amount?
If so then the rest remains invested in exactly the same way as it did before crystallisation but all future growth is taxable. 

Albermarle

SVaz said:

Presumably you’ve sold only enough investments to pay your TFLS amount?
If so then the rest remains invested in exactly the same way as it did before crystallisation but all future growth is taxable. 

Many providers will sell the investments for you, if you do not do it yourself, as I guess many people do not.