25% tax free lump sum from pensions

brewerdave

I took the maximum amount from a final salary pension ~ 16 years ago; I also have a SIPP and have recently converted part of this into a drawdown account and taken 25% of that tax free.
Read this weekend that you can only take 25% TFLS from two schemes - does that mean that I can't take any tax free cash from my remaining SIPP in the future  ?
Or does it count as still the same pension?
I have asked my pension holder but they have provided a very confusing answer!

HappyHarry

There is no such rule, there is no limit to the number of pensions you can take tax-free cash from or the number of times you can do so.

I have clients that take a monthly drawdown from their pensions, of which 25% each month is tax-free cash.

What have you read and where?  Please could you paste a link so we can see if there is some misunderstanding by you or by the article’s author?

Marcon

brewerdave said:

I took the maximum amount from a final salary pension ~ 16 years ago; I also have a SIPP and have recently converted part of this into a drawdown account and taken 25% of that tax free.
Read this weekend that you can only take 25% TFLS from two schemes - does that mean that I can't take any tax free cash from my remaining SIPP in the future  ?
Or does it count as still the same pension?
I have asked my pension holder but they have provided a very confusing answer!

They were probably baffled by the question! I don't know what you've read, but it's nonsense.

Sam_666

Pension providers are not free IFA.
Try using reputable information source for tax info and stay away from tabloid press/tv.
Visit hmrc website.

DRS1

brewerdave said:

I took the maximum amount from a final salary pension ~ 16 years ago; I also have a SIPP and have recently converted part of this into a drawdown account and taken 25% of that tax free.
Read this weekend that you can only take 25% TFLS from two schemes - does that mean that I can't take any tax free cash from my remaining SIPP in the future  ?
Or does it count as still the same pension?
I have asked my pension holder but they have provided a very confusing answer!

That may be because you took a PCLS from a final salary scheme 16 years ago.  A PCLS isn't calculated the same way as a TFLS from a DC scheme.  You don't say the pot is X and so the lump sum is 25% of X.
And because 25% is not the only limit on tax free cash.  There is a thing called the Lump Sum Allowance.
16 years ago the rules were different and there are some sums to do to check the PCLS against the LSA.
When you took your final salary benefits in 2009 you will have used up a percentage of your lifetime allowance.  That has now been abolished but they carry forward the percentage of LTA used up to set against the LSA.
So if you used up 50% of the LTA in 2009 then you only have 50% of the LSA available to cover the recent TFLS you took and any future ones.  But that is not the end of the story
Did you get a Transitional Tax Free Amount Certificate when you took the tax free cash "recently"?  That could have an effect on how much tax free cash you can still take.  If you took the maximum PCLS then you probably won't benefit from the transitional certificate - it is really for people who took a lower amount of tax free cash.

Simple isn't it?

brewerdave

I consider myself suitably admonished !
 Yes, re-reading my Q to Hargreaves Lansdown I realise that I wasn't clear !
As to the first reply as to where I read the info. I'm trying to find the article but so far no good but it definitely said two schemes.
The amounts concerned are a fair way below the current ££ allowance

Marcon

brewerdave said:

I consider myself suitably admonished !
 Yes, re-reading my Q to Hargreaves Lansdown I realise that I wasn't clear !
As to the first reply as to where I read the info. I'm trying to find the article but so far no good but it definitely said two schemes.
The amounts concerned are a fair way below the current ££ allowance

In pensions it is often difficult to formulate the question, never mind interpret the answer!

snowlaser

brewerdave said:

I consider myself suitably admonished !
 Yes, re-reading my Q to Hargreaves Lansdown I realise that I wasn't clear !
As to the first reply as to where I read the info. I'm trying to find the article but so far no good but it definitely said two schemes.
The amounts concerned are a fair way below the current ££ allowance

I wonder if you have mis-read an FAQ somewhere?  For example if it said:

Q: I have already taken a tax free lump sum from another scheme.  Can I still take one from this scheme?
A: Yes - you can take a tax free lump sum from two schemes.

That might make it sound like only two, when really it is any number so long as the total lump sum doesn't exceed £268k from all of them (note - the budget may change this limit!)