What does the Chancellors pension revolution mean for us?
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Potentially more as its based on your income.
If I were retired, wouldnt my income be 0 at that point?
Or does that include the amount youre withdrawing? IE if I had a pot of 100k left after the 25% tax free.. would I get taxed 0 on the first x amount then 20% on the next x amount, then 40% on the rest?0 -
To me it simply looks a flexible drawdown without the need to prove 20K income, it's a big deal for me and the wife.0
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If I were retired, wouldnt my income be 0 at that point?
Or does that include the amount youre withdrawing? IE if I had a pot of 100k left after the 25% tax free.. would I get taxed 0 on the first x amount then 20% on the next x amount, then 40% on the rest?
Any money you withdraw is income.0 -
One's investments held in a pension are in a perfectly good tax protected environment. What is the point of taking them out of that environment purely (presumably) to drip feed them into another tax-protected environment?
(i) Because taking the money freezes the tax rate on it at 20%.
(ii) And then I can put it into my wife's NISA so that she won't be stuck with tax-exposed money when I clogpop.Free the dunston one next time too.0 -
And i am sure that someone applying for benefits is welcome to pay for a lawyer to take the case on. Remember that taking the pension as a lump sum places the money into your bank account. It is no longer a pension at that point. So you would be spending your "savings".
What is deprivation of capital?
The term deprivation covers a broad range of ways in which the owner of an
asset might transfer it out of his or her possession. CRAG gives the following
examples:
- a lump-sum payment such as a gift or to pay off a debt
- transferring the title deeds of a property to someone else
- putting money into a trust that cannot be revoked
- converting money into another form that has to be disregarded from the means test, eg personal possessions, investment bonds with life insurance
- reducing capital through substantial expenditure on items such as expensive holidays or by extravagant living.
-Other courses of action, such as selling an asset for less than its true value, may also be seen as deprivation.
Possibly, but if the government allows you to take the money and do what you lilke with it, this can hardly be defined as deprivation. I would wait until this is fully defined before jumping to any conclusion.0 -
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The other lack of clarity would seem to be whether the the lump sum is really taxed at the current marginal rate or simply treated as income. I havent found anything on the net where what the chancellor said is clearly, fully and definitively explained.
It will be treated as income. We have been looking at the 54 page document on the gov.uk website and it has examples of different scenarios which confirms 40% tax could apply.
You can wade through it all here;
https://www.gov.uk/government/consultations/freedom-and-choice-in-pensions0 -
so even though the rules have changed they dont actually come into being until next year ? sorry i am a bit thick when it comes to this sort of thing !
Always when rules are changed there tends to be a time lag. The only immediate ones I remember is fuel duty going up at midnight on budget day? All that takes is the garages to raise or lower prices by the amt in question.
Anway, you haven't said int his post your original Q nor figures BUT, the 18K triviality goes up to 30K next week, and the take all your pension pot goes into effect in 2015(gonna take over a year for the govt to get the Free advice thing set up, and for financial institutions to come up with new products.
If you already had a DD pension, again next week your DD rate was raised to 150 (currently 120- ie 120% of the govt GAD rate set by gilts). In mid 2015 the pots become completely flexible.
The 25% Tax free continues in all cases, with any additional draw to be taxed at your normal rate. Take it all, or too much, and it could put you int he higher rate tax band.
If you have no other income and take only 10.5K a year, it is tax free.0 -
Of course it is.Truthseeker wrote: »Possibly, but if the government allows you to take the money and do what you lilke with it, this can hardly be defined as deprivation.
You can do anything you like with any of your money from whatever source. If you chose to blow it and then need help, that's deliberate deprivation.0
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