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Tax Free Lump Sum over 75

philuttley
philuttley Posts: 9 Forumite
Fourth Anniversary First Post
in Pensions, annuities & retirement planning
New to the forum so apologies if this has been covered already. I have two private pensions and have yet to take any tax free cash. I'm told that I must do this before I reach 75 as, after that, there may be tax liabilities. I've dome some research but it's not clear - there's mention of lifetime allowances which I don't understand. Any ideas?

Comments

  • dunstonh
    dunstonh Posts: 120,912 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    I'm told that I must do this before I reach 75 as, after that, there may be tax liabilities.

    Who told you that? Were you told this more than 3 years ago or recently? (rules changed in 2015)
    Is the lifetime allowance an issue for you (i.e. what is the value of your pension)?
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Dox
    Dox Posts: 3,116 Forumite
    1,000 Posts Third Anniversary Name Dropper
    Read Myth 3: https://blog.standardlife.co.uk/taking-tax-free-cash/
  • richone
    richone Posts: 31 Forumite
    Part of the Furniture 10 Posts Combo Breaker
    Its probably because the provider's pension contract doesn't allow tax free cash after age 75 - if they pay it after age 75 it will be treated as unauthorised payment by HMRC subject to 55% tax.

    This can be avoided by moving the pension to a company with a more up to date contract and more options at retirement, which could allow you to wait and take your tax free cash after age 75 if you wanted to.
  • Dox
    Dox Posts: 3,116 Forumite
    1,000 Posts Third Anniversary Name Dropper
    richone wrote: »
    Its probably because the provider's pension contract doesn't allow tax free cash after age 75 - if they pay it after age 75 it will be treated as unauthorised payment by HMRC subject to 55% tax.

    How can something permitted by law be 'unauthorised' - the legislation is overriding.
  • philuttley
    philuttley Posts: 9 Forumite
    Fourth Anniversary First Post
    Thanks for the responses - I was told last week; my pension is around £45K with Pru
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