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Thread: Pension advice

  1. #1
    Master jimp's Avatar
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    Pension advice

    Hi, I'm 55 at the end of March, I have small pension pot that I can cash in.
    Apparently the first £10000 is not taxed but the balance is.
    I've been told at 40%!
    I've searched on line and various sites have said I can can claim some of the tax back.
    Anyone done this?


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  2. #2
    Journeyman
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    Quote Originally Posted by jimp View Post
    Hi, I'm 55 at the end of March, I have small pension pot that I can cash in.
    Apparently the first £10000 is not taxed but the balance is.
    I've been told at 40%!
    I've searched on line and various sites have said I can can claim some of the tax back.
    Anyone done this?


    Sent from my [device_name] using TZ-UK mobile app
    My understanding of these things is that 25% of the pension pot was tax free and the rest was subject to tax

  3. #3
    Grand Master JasonM's Avatar
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    Again, armchair advice, but I think you can draw down the tax free part annually.
    Cheers..
    Jase

  4. #4
    Master jimp's Avatar
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    Quote Originally Posted by JasonM View Post
    Again, armchair advice, but I think you can draw down the tax free part annually.
    I read about that but need as much as I can to fund a small business.

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  5. #5
    My understanding, you can take 25 % tax free, if you actually take the rest out then it will just be taxed as income so depends on what
    tax band it would put you into if you took it in addition to you're other income.

  6. #6
    Quote Originally Posted by JasonM View Post
    Again, armchair advice, but I think you can draw down the tax free part annually.
    I think it's the rest that can be taken annually.

    From my armchair though!

  7. #7
    Master jimp's Avatar
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    Quote Originally Posted by TBKBABAB View Post
    My understanding, you can take 25 % tax free, if you actually take the rest out then it will just be taxed as income so depends on what
    tax band it would put you into if you took it in addition to you're other income.
    I earn around £25000 a year with overtime

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  8. #8
    Armchair advice, but my gut feel says don't draw down a pension for that purpose.

  9. #9
    Quote Originally Posted by jimp View Post
    I earn around £25000 a year with overtime

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    Then you could take 25% tax free and up to another £20,000 which would be taxed at 20%. Above that you would be paying 40% tax.

    But I am not saying this is the right thing to do.

  10. #10
    Master
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    There are some guides on the Hargreaves Lansdown website but I can't link to them directly. Page 10 of the 'Options for Retirement' has some guidance on taking the entire pension out including tax calculators & how to deal with being put on an emergency tax code.

    https://www.hl.co.uk/free-guides/you...-at-retirement

    You really should get paid advice though as almost no-one would think pulling everything out of a pension was a good idea (other than a very small one perhaps).

  11. #11
    Master jimp's Avatar
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    Quote Originally Posted by TBKBABAB View Post
    Then you could take 25% tax free and up to another £20,000 which would be taxed at 20%. Above that you would be paying 40% tax.

    But I am not saying this is the right thing to do.
    Would it only be the amount over £20000 that would be taxed at 40% ?

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  12. #12
    Quote Originally Posted by jimp View Post
    Would it only be the amount over £20000 that would be taxed at 40% ?

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    Current tax bands

    With standard personal allowance first £11,500 Tax free
    Then between £11,500 up to £45,000 - 20%
    Above £45,000 - 40%

    It would change a bit if you're total income was above £100,000 as you then start to lose some off your personal allowance and above £150,000 you pay 45%.

    If taking it all puts you onto this kind of money I would definitely suggest taking advice, you could try the government pension advice service https://www.pensionwise.gov.uk/en you can get a free appointment subject to what type of pension you have.

  13. #13
    Master
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    Quote Originally Posted by JasonM View Post
    Again, armchair advice, but I think you can draw down the tax free part annually.


    I think it boils down to how sophisticated the provider's systems are. Don't think the law says you need to take the tax-free element first, for example.
    Last edited by David_D; 20th February 2018 at 14:44. Reason: Typo

  14. #14
    Grand Master Andyg's Avatar
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    Say you have £100k in the pot then you can take 25k tax free.

    Assuming you have not recieved any other income in the Tax Year, you can also take your personal tax free allowance - about £11k.

    The remaining 64k, will be taxed at the applicable rates.

    If you want to avoid paying tax, then take the 25%, and then £11k per year until the money is all gone, but that of course assumes you have no other income.

    Whoever does not know how to hit the nail on the head should be asked not to hit it at all.
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  15. #15
    Grand Master oldoakknives's Avatar
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    Quote Originally Posted by Andyg View Post
    Say you have £100k in the pot then you can take 25k tax free.

    Assuming you have not recieved any other income in the Tax Year, you can also take your personal tax free allowance - about £11k.

    The remaining 64k, will be taxed at the applicable rates.

    If you want to avoid paying tax, then take the 25%, and then £11k per year until the money is all gone, but that of course assumes you have no other income.
    Thats what I was told by a financial adviser too.

  16. #16
    Craftsman
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    Quote Originally Posted by oldoakknives View Post
    Thats what I was told by a financial adviser too.
    Parents do something similar...

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  17. #17
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    Booked in to see a Financial Advisor this Friday to see if I will have enough to retire in 5 years when I hit 60. It will be interesting to see what she suggests as the best way to take the money out of the pot.

  18. #18
    Master aldfort's Avatar
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    Its a pension. Its for when you retire. You'll need to take advice anyway, it's mandatory unless the pension pot is classed as trivial.
    If you go in the .gov.uk web site it's all laid out for you.

  19. #19
    Quote Originally Posted by oldoakknives View Post
    Thats what I was told by a financial adviser too.
    Probably charged you £500 for it.

  20. #20
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    Quote Originally Posted by aldfort View Post
    Its a pension. Its for when you retire. You'll need to take advice anyway, it's mandatory unless the pension pot is classed as trivial.
    If you go in the .gov.uk web site it's all laid out for you.
    It isn’t mandatory- only if you want to transfer a defined benefit pension or the pension has some guaranteed element.
    OP sounds as if he has a straightforward DC scheme

  21. #21
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    £25 grand a year?, SC has been real good to you!!

  22. #22
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    Quote Originally Posted by aldfort View Post
    Its a pension. Its for when you retire. You'll need to take advice anyway, it's mandatory unless the pension pot is classed as trivial.
    Advice is only mandatory if you plan to transfer benefits out of a Defined Benefit (e.g. Final Salary) arrangement.

  23. #23
    Quote Originally Posted by David_D View Post
    Advice is only mandatory if you plan to transfer benefits out of a Defined Benefit (e.g. Final Salary) arrangement.
    And you can still get shafted.

    https://www.google.co.uk/amp/s/amp.t...authority-tata




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  24. #24
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    Quote Originally Posted by David_D View Post
    Advice is only mandatory if you plan to transfer benefits out of a Defined Benefit (e.g. Final Salary) arrangement.
    And over £30,000 fund value

  25. #25
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    Quote Originally Posted by westberks View Post
    And over £30,000 fund value
    At recent rates, a £30,000 value implies a minute pension! Can't recall as it's a while since I looked at it but former colleague maybe mid 40s accrued pension say £25k at 60/62 and the transfer value was north of £500,000.

  26. #26
    Master
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    Quote Originally Posted by BillyCasper View Post
    Yes, the particular genius of the rules was that you were required to obtain expensive advice which you could then choose to ignore. Also some absolutely evil unscrupulous "advisers" getting a huge pay day at the expense of individuals struggling with job loss, etc..

  27. #27
    Quote Originally Posted by westberks View Post
    And over £30,000 fund value
    Section 48 of the Pension Schemes Act 2015 requires that trustees or scheme managers check that advice has been taken before allowing a transfer to proceed, where the proposed transfer involves a DB pension or other safeguarded benefits worth more than £30,000. The advice must be provided by a firm with the FCA permission to advise on pension transfers. FCA rules apply to advice provided by FCA authorised firms and, in particular, we expect the firm to consider the assets in which their client’s funds will be invested as well as the specific receiving scheme.
    It's just a matter of time...

  28. #28
    Master aldfort's Avatar
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    I'm sorry, I'd assumed it was a decent DB scheme with a reasonable entitlement that the OP was asking about.

  29. #29
    Master jimp's Avatar
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    Quote Originally Posted by seadog1408 View Post
    £25 grand a year?, SC has been real good to you!!
    your point is?

  30. #30
    Grand Master oldoakknives's Avatar
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    Quote Originally Posted by Kingstepper View Post
    Probably charged you £500 for it.
    That part was free!
    Last edited by oldoakknives; 21st February 2018 at 01:23.

  31. #31
    Grand Master
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    Quote Originally Posted by jimp View Post
    your point is?
    My point was that if you are making 25 grand a year out of SC, business must be good.

  32. #32
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    Quote Originally Posted by David_D View Post
    At recent rates, a £30,000 value implies a minute pension! Can't recall as it's a while since I looked at it but former colleague maybe mid 40s accrued pension say £25k at 60/62 and the transfer value was north of £500,000.
    Totally agree, but op stated £10,000 fund value but not type of pension.

    I've seen multipliers approaching 40 times accrued benefits, yet one last week of about 14. Certainly wouldn't advise transferring the latter, even with the scheme in defecit as they'd probably be better off in the PPF if their scheme folds, with 90% of the benefits.

  33. #33
    Master Tifa's Avatar
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    Until the PPF falls on it's arse...

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