Chartered Financial Planner based in the UK.
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You NEED to know these 3 ways to take FLEXI ACCESS DRAWDOWN!

General principle here of tax planning is that we want to pay the lowest amount of tax you can using your available tax bands and allowances. Its why its really important to understand your tax bands and how your income from your pension and from your other taxable sources will work alongside one another.

And the one area that we have the greatest control in terms of incomes levels is from a personal pension. The state pension is largely fixed, unless you delay taking it, a final salary pension is also largely fixed both in terms of when it starts and the amount you get within certain parameters.

This is completely different for a personal pension. The income from a personal pension is guided by you based on a number of factors including, the value of the plan, how much you need or wish to take as an income, whether you want to pass anything on, on the underling investment returns and on your tax position.

You are restricted in terms of when you can access it, currently age 55 going to 57 from 2028, but other than this you can take the pension as you wish. And this is where it is crucial to balance that income from the pension in line with your needs and with your own tax position. If you take all of your pension as a lump sum you will pay the highest rates of tax, for example if the pension was £100k and you take it all out in one tax year the tax position will be £25,000 tax free cash with the remaining £75,000 treated as taxable income.

Link to the Government Money Helper Website:

https://www.moneyhelper.org.uk/en#

🗒 Please note:

The information provided is based on the current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. Also it may not reflect the options available under a specific product which may not be as wide as legislations and regulations allow.

All references to taxation are based on my understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances.

This channel is for information and education purposes only. Any information or guidance given does not act as financial advice. Please consult a financial adviser if you are unsure in anyway.

Keep in mind that the value of your investments can go down as well as up, so you could get back less than you invest.

⭐ My aim is to provide education and guidance to help individuals understand pensions, investments and protection.

#ukpensions #retirementplanning #taxfreecash