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cryrst The garden of England 29 Sep 19 7.35pm
Originally posted by Badger11 My advisor was able to set my pension up like this. 1. My work pension was transferred to an Income drawdown pension pot. The investment is managed by a wealth fund, other options available. 2. I drew 25% tax free withdrawal from this as a one off. 3. The Wealth Fund Manager transfers 20,000 per annum from the Drawdown pot to an ISA which they manage, this is tax free. 4. I have full access to this ISA so can draw down the balance anytime tax free. In your case you could do £20,000 pa over 2 years to get your 40k. However I agree with another poster you need to get proper financial advice it will cost but they can also do an overall financial health check including mortgage advice etc. It's worth it also my company would not release my pension unless I did this as they were protecting themselves. You could do this over 2 years with your ISA allowance although you would need some expert help setting it up. So you can draw down 20k into an isa and after a year its tax free? How can that work then. I thought once you drew down it was part of your annual salary and went against your annual tax code whether that be wages or state pension. Is this a loophole? How many isa's can you have at one time? How often can you draw on it?
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cryrst

The garden of England 29 Sep 19 7.35pm

Originally posted by Badger11

My advisor was able to set my pension up like this.

1. My work pension was transferred to an Income drawdown pension pot. The investment is managed by a wealth fund, other options available.
2. I drew 25% tax free withdrawal from this as a one off.
3. The Wealth Fund Manager transfers 20,000 per annum from the Drawdown pot to an ISA which they manage, this is tax free.
4. I have full access to this ISA so can draw down the balance anytime tax free. In your case you could do £20,000 pa over 2 years to get your 40k.

However I agree with another poster you need to get proper financial advice it will cost but they can also do an overall financial health check including mortgage advice etc. It's worth it also my company would not release my pension unless I did this as they were protecting themselves.

You could do this over 2 years with your ISA allowance although you would need some expert help setting it up.

So you can draw down 20k into an isa and after a year its tax free?
How can that work then.
I thought once you drew down it was part of your annual salary and went against your annual tax code whether that be wages or state pension.
Is this a loophole?
How many isa's can you have at one time?
How often can you draw on it?

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Eden Eagle Kent 29 Sep 19 8.58pm
Originally posted by cryrst So you can draw down 20k into an isa and after a year its tax free? How can that work then. I thought once you drew down it was part of your annual salary and went against your annual tax code whether that be wages or state pension. Is this a loophole? How many isa's can you have at one time? How often can you draw on it? With Flexible Drawdown - after you have taken your 25% PCLS (tax free amount) the balance is liable to income tax at your highest marginal rate. This is irrespective of whether it goes into an ISA or bank account etc so no loophole available..
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Eden Eagle

Kent 29 Sep 19 8.58pm

Originally posted by cryrst

With Flexible Drawdown - after you have taken your 25% PCLS (tax free amount) the balance is liable to income tax at your highest marginal rate. This is irrespective of whether it goes into an ISA or bank account etc so no loophole available..

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cryrst The garden of England 29 Sep 19 10.53pm
Originally posted by Eden Eagle With Flexible Drawdown - after you have taken your 25% PCLS (tax free amount) the balance is liable to income tax at your highest marginal rate. This is irrespective of whether it goes into an ISA or bank account etc so no loophole available.. So have i misunderstood what badger wrote then?
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cryrst

The garden of England 29 Sep 19 10.53pm

Originally posted by Eden Eagle

So have i misunderstood what badger wrote then?

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Eden Eagle Kent 30 Sep 19 7.12am
Originally posted by cryrst So have i misunderstood what badger wrote then? I think that perhaps Badger has misunderstood. You cannot avoid income tax by taking your income drawdown and putting it into an ISA. Withdrawals from an ISA are free from CGT & Income Tax however the drawdown will have been taxed prior to going into an ISA. If Badger has invested into an Investment ISA rather than Cash ISA I wouls also question whether this is good advice as you will usually pay fees for an Investment ISA and this should be invested for the medium term (5 years plus). Another point, funds retained within a pension wrapper are free from IHT whilst those in an ISA are not.
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Eden Eagle

Kent 30 Sep 19 7.12am

Originally posted by cryrst

So have i misunderstood what badger wrote then?

I think that perhaps Badger has misunderstood. You cannot avoid income tax by taking your income drawdown and putting it into an ISA.

Withdrawals from an ISA are free from CGT & Income Tax however the drawdown will have been taxed prior to going into an ISA.

If Badger has invested into an Investment ISA rather than Cash ISA I wouls also question whether this is good advice as you will usually pay fees for an Investment ISA and this should be invested for the medium term (5 years plus).

Another point, funds retained within a pension wrapper are free from IHT whilst those in an ISA are not.

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Badger11 Beckenham 30 Sep 19 7.33am
To be honest I do not completely understand the full details all I can say is that it is with a major Pension scheme provider and managed by one of the oldest financial firms in the country. The key points are that whilst my money is in the Pension pot I only pay income tax when I withdraw the money and only then after it exceeds my personal allowance. As for the transfer to the ISA as far as I know this is tax free. Anyway I am not a tax or pension expert but I am very happy with the setup even if I don't fully understand it. One more point
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Badger11

Beckenham 30 Sep 19 7.33am

To be honest I do not completely understand the full details all I can say is that it is with a major Pension scheme provider and managed by one of the oldest financial firms in the country.

The key points are that whilst my money is in the Pension pot I only pay income tax when I withdraw the money and only then after it exceeds my personal allowance.

As for the transfer to the ISA as far as I know this is tax free.

Anyway I am not a tax or pension expert but I am very happy with the setup even if I don't fully understand it.

One more point

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Goal Machine The Cronx 01 Oct 19 1.11pm
Originally posted by AERO Any Financial Advisers out there ? I have a Pension pot which I can now take , of around 40k . Will be ok for cash later in retirement so what penalties if any would I have taking the lot out and paying my mortgage off now . No penalties from provider . Thanks in advance. Hi Aero - I am a Croydon based IFA. I'll pm my contact details to you
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Goal Machine

The Cronx 01 Oct 19 1.11pm

Originally posted by AERO

Any Financial Advisers out there ? I have a Pension pot which I can now take , of around 40k . Will be ok for cash later in retirement so what penalties if any would I have taking the lot out and paying my mortgage off now . No penalties from provider . Thanks in advance.

Hi Aero - I am a Croydon based IFA. I'll pm my contact details to you

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Goal Machine The Cronx 01 Oct 19 4.54pm
Originally posted by Badger11 To be honest I do not completely understand the full details all I can say is that it is with a major Pension scheme provider and managed by one of the oldest financial firms in the country. The key points are that whilst my money is in the Pension pot I only pay income tax when I withdraw the money and only then after it exceeds my personal allowance. As for the transfer to the ISA as far as I know this is tax free. Anyway I am not a tax or pension expert but I am very happy with the setup even if I don't fully understand it. Eden Eagle is right. With Flexi Access Drawdown, you can take 25% tax free (it doesn't have to be taken at outset, you can take it over a number of payments if preferable). The remaining 75% when drawn, as either regular income or lump sum, is added to your other taxable income for the tax year and taxed at your highest marginal rate. It sounds like badger has either: - taken £20,000 tax free cash and put this into an ISA (the annual limit is £20,000), or - been tax savvy and drawn £12,500 taxable income, to use up his full personal allowance at 0% tax and drawn the £7,500 shortfall from the tax free cash element of his drawdown pot. Once money is in an ISA, like a pension, it grows free of capital gains tax.
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Goal Machine

The Cronx 01 Oct 19 4.54pm

Originally posted by Badger11

To be honest I do not completely understand the full details all I can say is that it is with a major Pension scheme provider and managed by one of the oldest financial firms in the country.

The key points are that whilst my money is in the Pension pot I only pay income tax when I withdraw the money and only then after it exceeds my personal allowance.

As for the transfer to the ISA as far as I know this is tax free.

Anyway I am not a tax or pension expert but I am very happy with the setup even if I don't fully understand it.

Eden Eagle is right. With Flexi Access Drawdown, you can take 25% tax free (it doesn't have to be taken at outset, you can take it over a number of payments if preferable). The remaining 75% when drawn, as either regular income or lump sum, is added to your other taxable income for the tax year and taxed at your highest marginal rate.

It sounds like badger has either:
- taken £20,000 tax free cash and put this into an ISA (the annual limit is £20,000), or
- been tax savvy and drawn £12,500 taxable income, to use up his full personal allowance at 0% tax and drawn the £7,500 shortfall from the tax free cash element of his drawdown pot.

Once money is in an ISA, like a pension, it grows free of capital gains tax.

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YT Oxford 01 Oct 19 4.57pm
Originally posted by Goal Machine Eden Eagle is right. With Flexi Access Drawdown, you can take 25% tax free (it doesn't have to be taken at outset, you can take it over a number of payments if preferable). The remaining 75% when drawn, as either regular income or lump sum, is added to your other taxable income for the tax year and taxed at your highest marginal rate. It sounds like badger has either: - taken £20,000 tax free cash and put this into an ISA (the annual limit is £20,000), or - been tax savvy and drawn £12,500 taxable income, to use up his full personal allowance at 0% tax and drawn the £7,500 shortfall from the tax free cash element of his drawdown pot. Once money is in an ISA, like a pension, it grows free of capital gains tax. It does indeed...so not much point in moving it from one to the other therefore. Palace since 19 August 1972. Palace 1 (Tony Taylor) Liverpool 1 (Emlyn Hughes)
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Oxford 01 Oct 19 4.57pm

Originally posted by Goal Machine

Once money is in an ISA, like a pension, it grows free of capital gains tax.

It does indeed...so not much point in moving it from one to the other therefore.

Palace since 19 August 1972. Palace 1 (Tony Taylor) Liverpool 1 (Emlyn Hughes)

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stuckinbristol In the woodwork. 01 Oct 19 5.04pm
Originally posted by YT It does indeed...so not much point in moving it from one to the other therefore. Other than any income taken from profits of an ISA are also tax free, unlike a pension.
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stuckinbristol

In the woodwork. 01 Oct 19 5.04pm

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Originally posted by YT

It does indeed...so not much point in moving it from one to the other therefore.

Other than any income taken from profits of an ISA are also tax free, unlike a pension.

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YT Oxford 01 Oct 19 5.10pm
Originally posted by stuckinbristol Other than any income taken from profits of an ISA are also tax free, unlike a pension. 'Income taken from profits'. What does that mean? Palace since 19 August 1972. Palace 1 (Tony Taylor) Liverpool 1 (Emlyn Hughes)
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Oxford 01 Oct 19 5.10pm

Originally posted by stuckinbristol

Other than any income taken from profits of an ISA are also tax free, unlike a pension.

'Income taken from profits'. What does that mean?

Palace since 19 August 1972. Palace 1 (Tony Taylor) Liverpool 1 (Emlyn Hughes)

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chris123 hove actually 01 Oct 19 5.11pm
Originally posted by stuckinbristol Other than any income taken from profits of an ISA are also tax free, unlike a pension. But there's a tax liability upfront on anything over 25% - so the start point is lower.
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chris123

hove actually 01 Oct 19 5.11pm

Originally posted by stuckinbristol

Other than any income taken from profits of an ISA are also tax free, unlike a pension.

But there's a tax liability upfront on anything over 25% - so the start point is lower.

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stuckinbristol In the woodwork. 01 Oct 19 5.23pm
Originally posted by YT 'Income taken from profits'. What does that mean? Possibly not the right terminology, but any interest accrued on an ISA can be withdrawn tax free, as I'm sure you already knew.
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stuckinbristol

In the woodwork. 01 Oct 19 5.23pm

Originally posted by YT

'Income taken from profits'. What does that mean?

Possibly not the right terminology, but any interest accrued on an ISA can be withdrawn tax free, as I'm sure you already knew.

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