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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4995
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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/Madam. I have a £67.000 pension pot, I am taken

Resolved Question:

Dear Sir/Madam.
I have a £67.000 pension pot, I am taken 50% this year, and 50% next year. I will be 75 in June this year, would that be a problem to taken out the final 50%.
Yours Kevin Beck.
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... when you say you have taken 50% this year, you mean you have taken £33,500 and this leaves £33,500 remaining in the pot and you would like to draw all of it in one go in the next tax year.

What is your total annual income including state pension?

Many thanks

Customer: replied 2 years ago.

PRIVATE PENSION. £4,218.32p.

OLD AGE PENSION. £7,330.96p.

----------------

ANNUAL INCOME. £11,549.32p.

Expert:  taxadvisor.uk replied 2 years ago.
Kevin, thank you for your reply and for additional information..

Your original question was "I have a £67.000 pension pot, I am taken 50% this year, and 50% next year. I will be 75 in June this year, would that be a problem to taken out the final 50%."

There would be no problem in you wishing to take the remaining 50% of your pension pot in the next tax year. You should be mindful of the fact that this sum would be deemed income in the tax year and chargeable to your marginal tax rate.
Lets assume the income becomes (11,549+33,500) £45,049
Personal allowance say £11,000
Taxable income (45,049-11,000) 34,049
There is a likelihood some £2,000 of the pension potdrawdown would attract tax at 40% and the rest be taxed at 20%.

Apart from some income be taxed at higher rate of 40%, there is no problem in taking that sume as income.

You may wish to spread it over two years to mitigate higher income tax on that sum.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

taxadvisor.uk and other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer.
Best wishes.