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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I am already in receipt of a final salary pension totalling

Resolved Question:

I am already in receipt of a final salary pension totalling £24k pa and still pay into a personal pension the pot valued at approx £55k. I am thinking of taking this out as a lump sum and the provider has advised me that I can do this but would like to know how much tax I would have to pay. I recently made 2 investments into a company and can claim tax relief via the SEIS scheme. The first investment totalled £16k in tax year 13/14 & the second £20k in tax year 14/15, my understanding is that I can backdate this and therefore use the £16k investment to claim tax back for the years 12/13 & 13/14. If I take the £55k from the pension do I get 25% tax free? and then pay Capital Gains on the remaining £44k (£33K approx after the allowance) and can I claim £10k of this back via SEIS. I think I previously took a 25% tax free lump sum from the final salary pension I am drawing now.
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

Your question is "If I take the £55k from the pension do I get 25% tax free? and then pay Capital Gains on the remaining £44k (£33K approx after the allowance) and can I claim £10k of this back via SEIS."

Yes, you would get 25% tax free cash lump sum out of the pension pot. The rest would be regarded as income and chargeable to Income tax and not capital gain that is subject to CGT.

If you were to invest this amount in a SEIS, you would claim 50% of your investment back in income tax.

More information on this can be found here

https://www.gov.uk/seed-enterprise-investment-scheme-background

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.

Customer: replied 2 years ago.

Thank you - sorry for my delay in coming back.

Do the pension company automatically tax the remaining 75% and at what rate?

If you have the appropriate allowance can you claim this all back?

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

The pension provider/company would automatically tax the remaining 75% at basic rate of tax i.e. 20%.

At the end of the eyar when you file your tax return you would show both the amount received and tax deducted.

You can claim the tax back if you have appropriate allowance to offset against the income..

I hope this is helpful and answers your question.
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.

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