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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4983
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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If the pension cap is lowered to £1m from the current level

Customer Question

If the pension cap is lowered to £1m from the current level how much extra tax will I pay on a pension which before tax is £105,000?
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

Please clarify for me...

I presume you are currently drawing a pension and is your pension remaining at £105,000?

Many thanks
Customer: replied 2 years ago.
No my pension is £105,000 pa gross.
Expert:  taxadvisor.uk replied 2 years ago.

Thank you for your prompt reply.

A reduction in pension cap would not make any difference to taxation of your pension income unless you exceed the lifetime allowance.

You would only pay extra tax if there were changes to personal allowance and reliefs available against income. Other wise, your tax would be calculated as before.

Tax payable if you go above your lifetime allowance - 25% if you get your pension as a regular payment.

More information on this can be found here

https://www.gov.uk/tax-on-your-private-pension/lifetime-allowance

I hope this is helpful and answers your question.

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