Financial Planning

Xbigman

Just to clarify, a UFPLS withdrawal is one where 25% of the amount withdrawn is tax free and the other 75% is taxable. It is extremely tax efficient for those with tax free allowance available in preserving tax free allowance for future years. Too many people think in terms of taking their tax free cash all at once just because its tax free.

You say above you don't currently pay tax but you need to know how much tax free allowance you have left in order to plan around all this. This year I have £7,860 of my tax free allowance left over. This allows me to withdraw up to £10,454 tax free. Currently I'm planning on withdrawing only about £6,600. £2,880 of that will go back in. So plenty of allowance to play with.

In your circumstances I would be looking to take out the maximum I could using UFPLS and any spare would pay something off.

DWP told you you could take out £12k. This is correct but I personally wouldn't do it. If you get reviewed they will see the balance over £6k and start asking for mortgage statements, etc. I don't think its worth the potential hassle when you can make 2 withdrawals in a year, stay under 5k in the bank and vary what months you do this each year plus take out slightly differing amount's (so no pattern is obvious). That's just my opinion obviously.

Darren

Diaz09

Worth checking if your mortgage provider offers payment holidays or reduced payment options for people on benefits - many lenders have hardship policies that aren't widely advertised. Before touching your pension, speak to StepChange or National Debtline about a full benefits check and mortgage support options. You might be surprised what help is available that could bridge the gap without depleting your retirement funds.