Hello, I'm Keith and happy to help you with your question.
The news is not good. The Telegraph has a cautionary warning on the matter viz:
'However any money taken from the pension pot will be treated as income for the tax year. So someone taking £70,000 from their pension during the tax year could be liable for high rates of tax on some or all of the money.
The tax rules also apply to expatriates, as they remain liable for UK income tax on any income drawn from UK sources, whether pensions, investments or buy to let property, according to the experts.'
Whichever way you turn you will be liable to UK taxation on any pension drawn by whatever method. Taking your pension pot makes the sums withdrawn liable to tax at your marginal rates and in your case there is a sizeable chunk to be taxed at 45%. 25% of the 450K pot would be tax free.
The balance would suffer tax as follows: Income excess of GBP 100K results in a loss of your Personal Allowance Your tax position would be of the order of: 31,785 @ 20% = 6,375, plus 118,215 @ 40% = 47,286 plus 187,500 @ 45% = 84,375; total 138,036 leaving you with say 311,964.
Not taking the 25K as you suggest would not make the slightest difference to your overall tax liability should you decide to free up your pension pot under the new rules in 15/16..
I am so sorry to have to rain on your parade.
Thank you for your reply .
Although the answer was grim, it is not as bad as I first thought.
Now we have made contact I should be able to give you the actual figures later this week for an exact answer.
Thank you again.