Author Topic: Taking out some of my pension pot at 55  (Read 1411 times)

grumpygit

  • Newbie
  • *
  • Posts: 1
Taking out some of my pension pot at 55
« on: Apr 28, 2017, 06:25:44 PM »
Hi All


First post on this website.


Even though I have always been quite sensible when it comes to putting funds into a pension of one sort or another or to be honest had it forced on me from the start, I am at best just having a basic understanding of how they work.


As well as having a Forces pension which I cannot touch until 60 I also had a few private schemes and a company pension which I tidied up  a decade ago into the one private pension now that I have my own business.


I am now 55, I know I can now take out 25% of my pension pot tax free. But how does it work if say I want another £30/£40k of it on top of the 25%, will my pension company just give the sum I want and it is then just left to me to declare it in my self assessment or will my pension company do it for me(tax)?

Phil

  • Hero Member
  • *****
  • Posts: 11902
Re: Taking out some of my pension pot at 55
« Reply #1 on: Apr 28, 2017, 11:18:13 PM »
I'm fairly sure that HMRC will require your pension provider to deduct the tax at source & then you would declare it on your SA100 by entering the gross amount in box 11 & the tax deducted in box 12.

If your pension provider didn't deduct tax at source then you'd just enter the gross amount in box 11 & enter a nil amount in box 12.
"I've stopped arguing with idiots. They will only bring me down to their level and beat me with experience.”

Paraphrased from George Carlin

StephenM123

  • Hero Member
  • *****
  • Posts: 4545
Re: Taking out some of my pension pot at 55
« Reply #2 on: Apr 29, 2017, 04:20:10 PM »
I think you need to go through your options carefully. It may be draw down is appropriate for you. Don't act in haste as you know what they say!

Phil

  • Hero Member
  • *****
  • Posts: 11902
Re: Taking out some of my pension pot at 55
« Reply #3 on: Apr 30, 2017, 07:50:08 AM »
Hi All

First post on this website.

Even though I have always been quite sensible when it comes to putting funds into a pension of one sort or another or to be honest had it forced on me from the start, I am at best just having a basic understanding of how they work.

As well as having a Forces pension which I cannot touch until 60 I also had a few private schemes and a company pension which I tidied up  a decade ago into the one private pension now that I have my own business.

I am now 55, I know I can now take out 25% of my pension pot tax free. But how does it work if say I want another £30/£40k of it on top of the 25%, will my pension company just give the sum I want and it is then just left to me to declare it in my self assessment or will my pension company do it for me(tax)?

I'm fairly sure that HMRC will require your pension provider to deduct the tax at source & then you would declare it on your SA100 by entering the gross amount in box 11 & the tax deducted in box 12.

If your pension provider didn't deduct tax at source then you'd just enter the gross amount in box 11 & enter a nil amount in box 12.

Hi grumpygit,

The advice about thinking carefully is good advice but from what say you'll already be doing that.

In reply to the question that you actually asked, it doesn't matter whether or nor your pension provider deducts income tax, you still have to account for it as taxable income on your self-assesment tax return.

It's one of the common mistakes where people think they don't have mention it because income tax has already been paid to HMRC.
"I've stopped arguing with idiots. They will only bring me down to their level and beat me with experience.”

Paraphrased from George Carlin

PensionExpert

  • Newbie
  • *
  • Posts: 2
Re: Taking out some of my pension pot at 55
« Reply #4 on: May 03, 2017, 09:40:41 PM »
Hi Grumpy,


When you take your pension commencement lump sum (25% tax free), you will be crystallising your pension, you have a few options in regards to the remaining funds in your pension but if your looking to take another 30/40k then you'll be after drawdown. I would strongly consider your timing as key, as 30/40k would likely push you to a higher rate tax payer (if you aren't one anyway), so you could've taken 20k by 5th April 2017 and then another 20k in the new tax year.


If you go drawdown, check the past performance of the funds, sometimes too much attention is given to charges, no point paying low charges for rubbish performance as it'll cost you more long term. You get what you pay for in this world.


Hope this helps