Pension Changes

Old May 16th 2015, 10:10 am
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Default Pension Changes

So from April 2015 those over 55yrs old can cash-in their private pension pot. My understanding is that the first 25% is tax free. The balance is subject to the highest tax rate. How does that affect Expats, whose overseas income is not taxable? Presumably, as the income is UK sourced, normal UK taxation rules apply. Any thoughts on how best to limit tax liabilities if we take the full cash option?
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Old May 16th 2015, 2:18 pm
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Default Re: Pension Changes

Originally Posted by mentalist View Post
So from April 2015 those over 55yrs old can cash-in their private pension pot. My understanding is that the first 25% is tax free. The balance is subject to the highest tax rate. How does that affect Expats, whose overseas income is not taxable? Presumably, as the income is UK sourced, normal UK taxation rules apply. Any thoughts on how best to limit tax liabilities if we take the full cash option?
Take 25% + £10,600 which is your personal allowance, so no tax due. Then take an amount equivalent to your PA each year thereafter, 'till the pot's empty
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Old May 16th 2015, 4:51 pm
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Default Re: Pension Changes

Spend it wisely ! Do not fall for any of the scammers who will be in touch soon.
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Old May 17th 2015, 6:45 am
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Default Re: Pension Changes

Originally Posted by Johnnyboy11 View Post
Take 25% + £10,600 which is your personal allowance, so no tax due. Then take an amount equivalent to your PA each year thereafter, 'till the pot's empty
But what about the rental income on my house back home? Also, if I cash in a Life policy, presumably that is added to my UK earned income for taxation purposes too.
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Old May 17th 2015, 8:48 am
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Default Re: Pension Changes

Originally Posted by mentalist View Post
So from April 2015 those over 55yrs old can cash-in their private pension pot. My understanding is that the first 25% is tax free. The balance is subject to the highest tax rate. How does that affect Expats, whose overseas income is not taxable? Presumably, as the income is UK sourced, normal UK taxation rules apply. Any thoughts on how best to limit tax liabilities if we take the full cash option?
For the vast majority of people fully encashing their pension is a terrible idea. The whole point of a pension is to provide you with an income for life.

Not all providers are providing full flexibility so it's not as simple as just making a withdrawal as requested each year as suggested above although that is essentially Income Drawdown which has been available for many years. Further official guidance is expected in June.

Apart from the Pension Commencement Lump Sum all income arising in the UK is subject to UK income tax and the Personal Allowance applies.

Anyone considering taking action needs to take proper advice from someone who actually understands the rules not from a bunch of people on the internet.

Info about the new rules here: UK Pensions Freedom – or is it? | Financialuae's Blog
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Old May 17th 2015, 8:50 am
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Default Re: Pension Changes

Originally Posted by mentalist View Post
But what about the rental income on my house back home? Also, if I cash in a Life policy, presumably that is added to my UK earned income for taxation purposes too.
UK rental income is income arising in the UK so liable to tax. What kind of life policy? Whether encashment is deemed a Chargeable Event depends on the plan and where you are resident.

See what I mean about taking proper advice?
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Old May 17th 2015, 10:44 am
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Default Re: Pension Changes

Pensions were invented to protect people from their own folly. Now the nutters are running the looney-bin, anything goes.
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Old May 17th 2015, 11:38 am
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Default Re: Pension Changes

Originally Posted by scot47 View Post
Pensions were invented to protect people from their own folly. Now the nutters are running the looney-bin, anything goes.
OMFG! I agree with something Scot47 says.

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Old May 17th 2015, 11:42 am
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Default Re: Pension Changes

This must go no further ! Any further attempts at fraternisation will be reported to the Grumpy Old Gits Club (Scottish Chapter) !
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Old May 18th 2015, 11:43 am
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Default Re: Pension Changes

Originally Posted by Meow View Post
For the vast majority of people fully encashing their pension is a terrible idea. The whole point of a pension is to provide you with an income for life.

Not all providers are providing full flexibility so it's not as simple as just making a withdrawal as requested each year as suggested above although that is essentially Income Drawdown which has been available for many years. Further official guidance is expected in June.

Apart from the Pension Commencement Lump Sum all income arising in the UK is subject to UK income tax and the Personal Allowance applies.

Anyone considering taking action needs to take proper advice from someone who actually understands the rules not from a bunch of people on the internet.

Info about the new rules here: UK Pensions Freedom – or is it? | Financialuae's Blog
Thanks for the input, Meow.
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