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Making a withdrawal: Pension payments

Shared from Tax Insider: Making a withdrawal: Pension payments
By Richard Curtis, May 2024

Richard Curtis looks at income tax implications of withdrawals from a personal pension plan. 

Attractive tax reliefs are available on contributions to a personal pension plan and to the plan itself, but the focus here is on the basic income tax implications when the saver wishes to draw money from that pension.  

The past 20 years or so have seen the introduction of more flexibility, and since 2015 flexi-access drawdown has meant that savers can generally draw from their pensions without restriction if they are aged 55 or over. 

The lump sum 

Up to 25% of the value of the accumulated value of a personal pension plan can be withdrawn as a tax-free lump sum. This does not have to be taken as a single payment and it could be taken over a period of years.  

A lump sum could be a useful resource if cash is required to meet unexpected expenses

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