DB pension, a SIPP and tax free lump sums
Discussion
Hi,
I understand if I have, for instance, a DC pension, that I can take 25% of the value at crystalisation as cash and this would be tax free.
However, in the event that I have a DB pension (I'd envisage the LTA value at my envisaged retirement date to be around £675k) and another £250k in a SIPP, would it be plausible to take 200k from the SIPP as tax free? To my very untrained mind I'd imagine that the SIPP provider would go "no, you'll get taxed a boatload on what we believe the difference is" and then I'd need to argue it out with HMRC? Or, is it possible, at crystalisation to provide a view of say the CETV of the DB and then that'd satisfy then that what I'm wanting to do isn't going to require a tax payment?
Either Google isn't being my friend or I've not quite found the right terms to get the right answer on this one.
I understand if I have, for instance, a DC pension, that I can take 25% of the value at crystalisation as cash and this would be tax free.
However, in the event that I have a DB pension (I'd envisage the LTA value at my envisaged retirement date to be around £675k) and another £250k in a SIPP, would it be plausible to take 200k from the SIPP as tax free? To my very untrained mind I'd imagine that the SIPP provider would go "no, you'll get taxed a boatload on what we believe the difference is" and then I'd need to argue it out with HMRC? Or, is it possible, at crystalisation to provide a view of say the CETV of the DB and then that'd satisfy then that what I'm wanting to do isn't going to require a tax payment?
Either Google isn't being my friend or I've not quite found the right terms to get the right answer on this one.
mrmistoffelees said:
Hi,
I understand if I have, for instance, a DC pension, that I can take 25% of the value at crystalisation as cash and this would be tax free.
However, in the event that I have a DB pension (I'd envisage the LTA value at my envisaged retirement date to be around £675k) and another £250k in a SIPP, would it be plausible to take 200k from the SIPP as tax free? To my very untrained mind I'd imagine that the SIPP provider would go "no, you'll get taxed a boatload on what we believe the difference is" and then I'd need to argue it out with HMRC? Or, is it possible, at crystalisation to provide a view of say the CETV of the DB and then that'd satisfy then that what I'm wanting to do isn't going to require a tax payment?
Either Google isn't being my friend or I've not quite found the right terms to get the right answer on this one.
No, you can’t. I understand if I have, for instance, a DC pension, that I can take 25% of the value at crystalisation as cash and this would be tax free.
However, in the event that I have a DB pension (I'd envisage the LTA value at my envisaged retirement date to be around £675k) and another £250k in a SIPP, would it be plausible to take 200k from the SIPP as tax free? To my very untrained mind I'd imagine that the SIPP provider would go "no, you'll get taxed a boatload on what we believe the difference is" and then I'd need to argue it out with HMRC? Or, is it possible, at crystalisation to provide a view of say the CETV of the DB and then that'd satisfy then that what I'm wanting to do isn't going to require a tax payment?
Either Google isn't being my friend or I've not quite found the right terms to get the right answer on this one.
scot_aln said:
Does the DB scheme not have a defined amount that you can take as a tax free sum too. You can therefore (I think) take that and the 25% from the SIPP.
It does, and that would be an option. However, I've realised that another option would be to shovel cash into an AVC in the DB scheme and then utilise that for the lump sum instead of via the SIPP. Speaking to the pension administrator this looks like a more viable strategy than taking the amount I need through the SIPP instead.Thank you
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