Taking A Private Pension

[jasmin26]

Could anyone help me with working out the approx. tax I would pay if I take one of my private pensions ? I have received the figures from my pension company today but I am unsure what to do.

I have a pension pot with them of £52000 and my salary before tax is £20000 . I am not sure whether to take part of it or all of it, it all depends on the tax situation. TIA

[ubasses]

You can take 25% tax free, any more will be added to your income for the year and taxed at the appropriate rate. So if you took the full amount you would put yourself into the higher tax bracket for this year.

[jasmin26]

So have I got this right that I would have £10000 tax free on my salary £13000 tax free on my pension leaving £48000 to be taxed ? Would that be so much of it be at 20% and the rest at the higher rate of 40% ?

[ubasses]

Yes you are correct.
£52,000 minus 25% =
£39000+
£20000 salary =
£59000 less £10600 tax free allowance =
£48400 You would pay 20% on £31785 and 40% on the remainder.

[Peter Pedant]

hey here is a fun pension calculator

https://www.moneyadviceservice.org.uk/en/tools/pension-calculator

are you gonna try draw down ( taking money before your pension age ) not very advisable

or take the pension ?

a pot of £50k - you would get £12k tax free but then the annuity would only be about £1000 a YEAR !

and on your salary the tax charge is minimal - and extra £200 a year at 20%

n this case do not allow the tax tail to wag the dog

[sunny-dave]

Yes - that's right - total income of £72,000 of which £23,000 tax free.

You'd pay 20% on around £32,000 and 40% on the remaining £17,000 or so.

[jasmin26]

Thank you for your answers, I have another two pensions which will remain untouched and also I have a Civil Service pension. I have worked it out so many times I think I am starting to confuse myself.

[New Judge]

Not sure if you are in receipt of your State pension yet. If you are, bear in mind that although it is paid free of tax it actually forms part of your taxable income. This means your annual personal tax free allowance will be reduced by the amount of your State pension.

[jasmin26]

Hi New Judge no I am not on my state pension I am still working full time