Cashing In A Pension

[mumstheword1]

I know I will have to take advice from a qualified pension advisor but just want to ask a quick question. For example when it says your pot is £29000 if I cash it in would I get £29000. ? I realise that 25% is tax free.

[bobbinwales]

Yes unless they says there's a withdrawal fee...but just ask them. Of course the actual value varies as the stock market or other investments change on value so the final pot could be a few % either way dependant on the timing

[ToraToraTora]

25% is tax free the rest would be treated as income for the tax year in which you take it and taxed accordingly.

[Hymie]

I recently cashed in a pension pot taking the full amount with 25% tax free.

In taking the compete amount, 75% of which will be taxable – you need to ensure that in doing so, it will not take you into a higher rate tax bracket (income over circa £50k), where you will pay 40% or even 45%*.

If you have no other income for the tax year, you should consider taking the 25% tax free and then drawing down your zero tax allowance amount, circa £12k (for most) – paying no tax at all on the pension pot withdraws.

*Even though the total amount of money I took form my pension would not make me a higher rate tax-payer, HMRC assume incorrectly that it will be a regular income amount, and taxed me at 40% and 45% on some of the pension. You can fill in a form and get the money back quicker than waiting for HMRC to correct things.

[bobbinwales]

yes, useful tax info but I got the impression mumstheworld know's 75% is taxable buts wanting to know if the full pots payable or whether theres some sort of fee taken off???

[mumstheword1]

Thank you for taking the time to reply. Does that mean that I will get the amount it states. I.E pot of £29000?

[Hymie]

Yes, as said above, but you’ll get 25% tax free (£7,250) and the remainder (£21,750) taxed at your normal rate, assuming 20% = £17,400. Giving a total after tax deductions of £24,650.

But see my post above for possible routes to reduce your tax liability, and avoid paying more.

[bobbinwales]

And as ftse as fallen last week it might now be nearer 28000

[ToraToraTora]

also you can leave the 75% in a draw down fund and and later choose to take the cash when it most tax efficient for you.

[mumstheword1]

Thank you all