Holly Mckay
Holly MackayFounder and CEO
Avatar

Subscribe Now

Free of Charge

Avatar
    • Home • Advice • Common questions

    Can I take up to 25% of my pension pot without having to pay any tax?

    20 November 2023

    Question by Robin

    I have a work place pension that pays me enough to live off for the time being. I also have an old personal pension plan that is worth about £25K which I have not touched for several years. Am I right in thinking that I can take up to 25%, i.e. £6,250, of this small pension pot without having to pay any tax? I am a basic rate tax payer and the extra £6,250 wouldn't take me into the higher income tax bracket. I'm looking spending some money on tidying up my house.

    Answered by Tracey Che

    Hi Robin,

    If you have never taken any money out of the pension worth c£25k (i.e. it is uncrystallised), and assuming you have not taken the full tax-free cash allowance across all of your pensions, then you are correct in thinking that you will be able to access 25% of this pot as a tax-free lump sum.

    This is different to taking pension income, which is taxable and can take you to higher rate income tax.

    Hope this helps.
    Tracey

    Answered by

    Tracey Che

    Financial Planner

    As a Financial Planner at Moore Kingston Smith, I provide holistic financial planning to high-net-worth individuals.

    Important stuffHolly and the team have worked in the finance industry for many years but we are not regulated to give you personal financial advice. For every story on this website about a good investment, or something which went up by 10% or made someone £200, we could also share a story about a bad investment, something which fell in value or lost someone £200. We aim to provide general information and pointers – and btw we are totally agnostic about which providers you might pick – but if you have complex affairs, want personalised advice or need specific recommendations, please look at advice pages and see if regulated digital or traditional financial advice would be the best solution for your needs. Boring Money Ltd is a limited company registered in England and Wales under registration number 09459832 and we have our registered office at 10 Lower Thames Street, London, England, EC3R 6AF.
    Risk warningAs is always the case with investing, your capital is at risk. The value of your portfolio can go down as well as up and you may get back less than you invest. Tax treatment depends on your individual circumstances and may change in the future.
    Boring Money Ltd is a limited company registered in England and Wales under registration number 09459832 and we have our registered office at 10 Lower Thames Street, London, England, EC3R 6AF.
    |

    We use cookies

    You will see cookie information on different websites and regulation means that we need to ask your permission to use them. We use cookies to improve our website, for analysis of our visitor data, to show personalised content and to give you a great website experience. For more information about the cookies we use open the settings.