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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4996
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Im thinking of taking my pension in a lump sum i know i can

Resolved Question:

im thinking of taking my pension in a lump sum i know i can take 25% so how much tax would i pay on the other 75% and do i have to invest it all
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

If you were to take all your pension in a lump sum, then the first 25% would be tax free and the rest would be treated as earned income and you would pay tax at your marginal rate of tax.

if the remaining 75% when added to your other income is no higher than £42,385 then your tax rate would be 20%.

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
Customer: replied 2 years ago.

the 75% is £162-000 and do i have to reinvest it into another pension

Expert:  taxadvisor.uk replied 2 years ago.
Diane, thank you for your reply.

You don't have to reinvest it into another pension.

You may wish to withdraw the balance in smaller chunks to remain at 40% tax rate instead of paying 45% on some on this money and also not losing your personal allowance.

You can only invest into another pension and get tax relief if you have earned income e.g. salary or profits from self employment.

I hope this is helpful.
Expert:  taxadvisor.uk replied 2 years ago.
Diane, you may find information here helpful ...

http://www.bbc.co.uk/news/business-32087038



I hope this is helpful
Customer: replied 2 years ago.

yes thank you that was very helpful

Expert:  taxadvisor.uk replied 2 years ago.
Diane, thank you for your reply.

I hope information given is helpful and answers your question.

If you are happy and there are no more issues I will appreciate if you would kindly rate/accept the service I provided to ensure I get credited for it.

Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer.

Best wishes.