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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4186
Experience:  FCCA FCMA CGMA ACIS
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I am at the moment receiving income from a income drawdown

Customer Question

I am at the moment receiving income from a income drawdown policy. With the new pension rules from 2015 will I be able to take all my pot as a cash lump sum. I do realise that I have already taken my 25%tax free lump sum already and I do realise that there will be tax at different levels to pay. I cant seem to get an answer to this, I will be receiving my state pension From Dec 2014
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.

With the greatest respect, you might not be, but others are! The new rules are included in the Finance Bill. 2014 which has yet to pass the Commons so the proposal is still in limbo. If you withdraw your whole pension pot under the new rules after April 2015 then you will be taxed on the sum withdrawn at your marginal rate of Income Tax (IT).

Add the pot to your income. take of the Personal Allowance (PA) of 10K, and the whole shooting match will be taxed at 20% for the first GBP 31,865 and 40% thereafter. If you go over the 100K limit then your PA will be successively withdrawn at the rate of 1 pound for every 2 pounds over the 100K. Over 150K the IT rate rises to 45%.

The 14/15 rates of PA and indeed IT have yet to be given, but there appears to be a clear government policy of squeezing the tax bands downwards.

I do hope that I have been able to shed some light on your position.
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Expert:  bigduckontax replied 3 years ago.
Thank you for your support.