How much Tax free lump sum

[reedy]

Hi all. I have just got my figures to take my pension. Below are my figures which are for reduced pension and max lump sum Could somebody give me a rough idea how much i can get tax free on the basis i take a reduced pension for a lump sum. Pensions dont give a figure which includes avs or DBCBS only the lump sum with reduced pension. Iam in section c
Rmpp Nra 60 .Pension £6474.13. Lump sum 43,160
Nra 65. Pension £476.44 .Lump sum £3177.60
Rmsps Nra 60 Pension £818 Lump sum £546.65
Nra 65 Pension £1399.70 Lump sum £9331.32
DCBS £30,460.71
AVC £45,000

[RobertT]

Do you want to take the maximum lump sum possible?
If so it sounds like you have the figures already, minus tax.

The 4 lump sum amounts you mention are the 25% tax free figures as a result of commuting some of your pension.

Therefore the AVC's and DBCBS will be paid 25% tax free and the remainder classed as income and taxed accordingly.

Going by your numbers, it sounds as if your total tax free lump sum would be made up of:

£56,200 from the main NRA60/65 pension
£11,250 from AVC's
£7,615 from DBCBS

Leaving a remainder of £56,595 from the DBCBS and AVC's to be taxed along with your pension and wages earned during the financial year.

[reedy]

Thanks Robert going by that then i would use my avc to pay for my nra 60 lump sum to get a bigger pension and have a smaller amount left over that would be taxed

[Duran]

Thanks Robert going by that then i would use my avc to pay for my nra 60 lump sum to get a bigger pension and have a smaller amount left over that would be taxed

Or you could take the hit on tax and lock away in a high interest account. Feeding 20k per year into an isa for you and partner. £100k would give you an extra 5k per year taxable, at the moment, until all monies are transferred to isa's.

That's my intentions, keep capital withdraw interest each year to supplement pension.

[RobertT]

Thanks Robert going by that then i would use my avc to pay for my nra 60 lump sum to get a bigger pension and have a smaller amount left over that would be taxed

Or you could take the hit on tax and lock away in a high interest account. Feeding 20k per year into an isa for you and partner. £100k would give you an extra 5k per year taxable, at the moment, until all monies are transferred to isa's.

That's my intentions, keep capital withdraw interest each year to supplement pension.

If there's a chance of 40% tax being payable, which there would be in Reedy's case, transferring the excess to a personal pension could negate that. You then just drawdown enough each year to stay within the 20% band.

You may know there is a £1,000 per year tax free allowance on savings interest, meaning cash ISA's are useful to shield large amounts from the taxman.

But something to consider for anyone who's income is less than £17,570 per year. There's an additional allowance where you can earn up to another £5,000 in tax free interest from 'normal' savings accounts, which often pay higher rates than cash ISA's.

https://www.moneysavingexpert.com/savin ... e-savings/