How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4964
Type Your Tax Question Here...
bigduckontax is online now

I have a pension pot under a registered pension scheme of 1.5m

This answer was rated:

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?
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 2 years ago.
I am 58 and intend to retire in 2 years.
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: 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 2 years ago.
I have protection in place with HMRC for 1.5m. Does the 25% tax free include the unregistered scheme?
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.
bigduckontax and other Tax Specialists are ready to help you
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.