There is a Lifetime Allowance for the amount you can withdraw from your pension over your lifetime. If you withdraw more than this it will trigger a tax charge The Lifetime Allowance is £1.25 million (reduced from £1.5 million in 2013-14). You should be aware:
- This includes both lump sums and pension payments
- This one limit applies to payment from all of your pensions apart from the State Pension
- You can check to see whether this impacts you by looking at the HMRC website. Use the HMRC Lifetime Allowance checker.
- The rate of tax you pay on pension withdrawals above your Lifetime Allowance is 25% for a regular pension payment and 55% if you withdraw a lump sum
- There are transition arrangements in place for the recent reduction in the Lifetime Allowance from £1.5 to £1.25 million. “Individual Protection” is available if the value of your pension savings on 5 April 2014 is over the new limit of £1.25 million but below the £1.5 million. More information is available of the government pension site.
If you are evaluating your pension, we strongly advise that you seek professional advice from a fully qualified and regulated Independent Financial Advisor. Pension decisions are usually a major financial decision that requires the appropriate level of advice to make the right choice. In contrast, mistakes can be costly. To arrange for a no obligations, initial free telephone consultation click here