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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4181
Experience:  FCCA FCMA CGMA ACIS
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I have a pension pot under a registered pension scheme of 1.5m

Customer Question

I have a pension pot under a registered pension scheme of 1.5m and a pension pot under an unregistered scheme of 6.2m. How will this be taxed if I take both pots as cash?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
Please advise your age, this is of fundamental importance.
Customer: replied 1 year ago.
I am 58 and intend to retire in 2 years.
Expert:  bigduckontax replied 1 year ago.
Right you are over 55 which is the key age. If you liberate your pension pot now you will receive 25% fax free and the balance taxed at your marginal rate of tax. This will put you into the 45% tax bracket and you will also loose your personal allowance as your income will exceed 100K. Furthermore your pension pot is in excess of the 1.25 million Lifetime Limit so any pension release above this sum will be taxed at 55%. Have a look here for HMRC application to protecting a pension pot which is over the limit. In my opinion this may be necessary in your case: https://online.hmrc.gov.uk/shortforms/form/IP2014?dept-name=&sub-dept-name=&location=36 You have until 5 April 2017 to take protective action. I do hope that my reply has been of assistance. A very large sum of money is at stake here and it might be wise to consult a trusted, local professional in this matter.
Customer: replied 1 year ago.
I have protection in place with HMRC for 1.5m. Does the 25% tax free include the unregistered scheme?
Expert:  bigduckontax replied 1 year ago.
Good, you did the right thing. The unregistered scheme is unlikely to enjoy the 25% tax free bounty. I am so sorry to have to rain on your parade.
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.
There is one other matter you should bear in mind. Pension funds will charge for pension liberation, anything from 5% to 20%, another impost on your proposals.