Taking tax free cash from your pension
You can take out some or all of the money from your pension scheme
So how does that work?
Lets explain...
- Once you reach retirement age you can take out some or all of your money from your pension pot. Depending on your pension there will be restrictions of what age you need to reach, before you can access your money.
- What’s more, you can take up to 25% completely tax-free in addition to the yearly tax-free allowance for income and leave your remaining pension fund invested.
your cash lump sum
Your tax-free cash could free up money to...
- Pay off any remaining mortgage
- Save for emergencies and unforeseen expenses
- Take that holiday of a lifetime
- Invest in products that generate a tax-free income, like ISA's
How to access your tax-free cash
Here's how you can access your tax-free cash
Up to 25% as tax-free cash
- Take up to 25% of your pension pot as a tax-free lump sum. The remaining 75% would then be used to buy a pension product, for example an annuity, and would be liable for any tax when you take it.
25% tax-free on every withdrawal
- Take 25% tax-free on every withdrawal as you go. You can leave your pension fund where it is and take out chunks of money as and when you need them. 25% of each withdrawal would be tax-free.
TAX-FREE CASH IMPORTANT INFORMATION
Here's what you need to know
- Taxable pension income includes earnings from employment or self-employment, investments, the state pension and other taxable benefits and income, such as money from a property rental.
- Any balance above the 25% tax-free sum will be added to any other income you have and taxed.
- You can take all of your pension savings as a cash lump sum or just your tax-free 25% cash lump sum and the money is yours to spend however you like.
- Any references we make to taxation are based on our current understanding of current legislation and HM Revenue & Customs practice, which can change.
Tools and Calculators
Handy tools to support your planning
Annuity Calculator
Using today's rates our calculator can give you a snapshot of the income your pension savings could buy you in retirement. You can also choose to add your health details to personalise your quote even more!
Pension income calculator
You don't have to buy an annuity to get an income in your retirement. Our pension income calculator will give you a quick overview of the other options you could consider.
State pension Age
Looking for your state pension age and what you can expect to get? Our friends at Gov.uk have you covered.
Financial advice
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