I'm over 55 and still contracting. I've been looking into the rules regarding drawdown pensions. Am I right in thinking that for every £1000 I directly put into my pension, I can put it straight into drawdown and take £250 tax free as long as I leave the £750 there. So effectively it's a way of increasing my income tax free whilst adding to my pension?
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Pension and drawdown
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Originally posted by smudger View PostI'm over 55 and still contracting. I've been looking into the rules regarding drawdown pensions. Am I right in thinking that for every £1000 I directly put into my pension, I can put it straight into drawdown and take £250 tax free as long as I leave the £750 there. So effectively it's a way of increasing my income tax free whilst adding to my pension?Public Service Posting by the BBC - Bloggs Bulls**t Corp.
Officially CUK certified - Thick as f**k. -
But watch out if you go into MPAA and also the recycling rules if you intend to put (any of) that 25% back into your pension with the aim of getting tax relief and a further 25% tax free withdrawal.
Drawdown FAQs | Hargreaves Lansdown.
PTM133810 - Pensions Tax Manual - HMRC internal manual - GOV.UKLast edited by Paralytic; 13 February 2021, 17:44.Comment
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Originally posted by Paralytic View PostBut watch out if you go into MPAA and also the recycling rules if you intend to put (any of) that 25% back into your pension with the aim of getting tax relief and a further 25% tax free withdrawal.
Drawdown FAQs | Hargreaves Lansdown.
PTM133810 - Pensions Tax Manual - HMRC internal manual - GOV.UKPublic Service Posting by the BBC - Bloggs Bulls**t Corp.
Officially CUK certified - Thick as f**k.Comment
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Originally posted by Fred Bloggs View PostJust taking the 25% will not trigger MPAA, but correct to flag it up. It isn't widely understood that if you take even 1p more than the tax free lump sum, then MPAA is triggered.
How do you factor unrealised gains into that for example? What is the exact figure you use and when is the date?See You Next TuesdayComment
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Originally posted by Lance View PostWhen the pension fund is in various funds, shares, bonds etc. calculating the 25% drawdown is not gonna be simple though I guess.....
How do you factor unrealised gains into that for example? What is the exact figure you use and when is the date?Public Service Posting by the BBC - Bloggs Bulls**t Corp.
Officially CUK certified - Thick as f**k.Comment
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Really? So you can pay pension in and just take it out like that (as long as you don't take more than 25% of the total over the year)?
Incentive to bung loads into pension then....
Im with HL (and a year or so from 55) so was wondering how it works?
MPAA is where you're limited to contribs yeh? But only if you take more than 25% yeh?
What if you've got one active fund you're paying into but one dormant fund you;re taking out of?
Or does triggering MPAA affect ALL you're funds?Rhyddid i lofnod psychocandy!!!!Comment
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Originally posted by psychocandy View PostReally? So you can pay pension in and just take it out like that (as long as you don't take more than 25% of the total over the year)?
Incentive to bung loads into pension then....
Im with HL (and a year or so from 55) so was wondering how it works?
MPAA is where you're limited to contribs yeh? But only if you take more than 25% yeh?
What if you've got one active fund you're paying into but one dormant fund you;re taking out of?
Or does triggering MPAA affect ALL you're funds?
Take £2500.01 and you trigger the MPAA. You really wouldn't want to do that at 55 years old all things bring equal.
MPAA, once triggered, counts towards all pensions.
*** Assuming company contribution so no wait for tax reclaim.
Disclaimer - I am a regular punter, not an advisor, check what I said is true.Public Service Posting by the BBC - Bloggs Bulls**t Corp.
Officially CUK certified - Thick as f**k.Comment
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Originally posted by Fred Bloggs View PostDifferent platforms show it differently. For example, HL show crystallised and non-crystallised funds as two discrete pots so it's very easy to see what's what. Other platforms take a slightly less obvious approach. For example, at Interactive Investor you have to click through a couple of links to see how much is crystallised and how much is non-crystallised but not as two discrete pots of assets. It's a bit messier at II and not quite as easy to find until you know where to look. But at anytime, you can see how much remains uncrystalised on the day. For other platforms, I don't have personal experience. HTH.Public Service Posting by the BBC - Bloggs Bulls**t Corp.
Officially CUK certified - Thick as f**k.Comment
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