Withdrawals From Pensions

WelshScotsman

Here's my question i need some guidance / help with.

I had 3 pension from different employers, cashed "one in" with the normal rules of 25% tax free everything else at Standard Rate.

So does the same rules apply to the others do i still get the first 25% Tax free

Or because i have cashed one in do i have to the tax at standard rate on all others

Thanks In Advance

sheslookinhot

you will get 25% tax free from each pension.

eskbanker

It'll depend on the exact nature of the pensions, so, for example, if either is a defined benefit scheme then the tax-free lump sum may not be 25%.

LHW99

And, for completeness, once you have hit the lump sum allowance for tax-free cash (~£268k in total), you can't get (much) more, even if eg 25% of the third pension could potentially take you beyond that.

DRS1

and any taxable pension you draw may not be taxed at the "standard" rate. Depending on the amount you may pay zero tax or you may pay 20%, 40% or 45% or some blended rate of all of those.

You talk about cashing in - but your pensions are meant to last for the rest of your life.

Paul_Herring

Or because i have cashed one in do i have to the tax at standard rate on all others

Depends on whether that single one's 25% worth takes you up to the lifetime cap of £268,275 or not.

If not, you get 25% of any more you crystallise, with any crystallisation withdrawn taxed at your current marginal rate of 0%, 25%, 40% or 45% depending on your total 'income' during the current tax year.

Once you hit that lifetime cap of PCLS, everything else withdrawn will be taxed at your current marginal rate without any tax free sums.

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In brief, if your total pension funds are worth under £1,073,100, you'll get 25% tax free on each pot, with the remainder being taxed as if it was income. in the year withdrawn. Anything over that amount gets taxed with no tax free element.