pension

[johnbjohn]

Don't know if this is the section to be in but can anyone tell me how much tax and national insurance will be taken off me if i take an offer of �7500 for a pension i have with a company i was with 10 year ago it has �6900 in it. Thanks

[factor-fiction]

You won't pay NI on a pension. Assuming you have no other earnings in the tax year you will pay tax at the rate of 20% only on any pension income over thetax allowance.
But if �7500 is the value of the pension fund then the annual income you get will be small- the amount depends on our age but it will probably be only a few hundred pounds a year

[New Judge]

It is not clear whether your �7,500 is an annual payment or a lump sum.

If it is an annual payment, as factor30 says, you will pay normal income tax on it. If you have any other income it will be added to that and then taxed. No NI is payable on pension income.

If it is a lump sum it will be tax free provided it does not exceed 25% of your total pension pot.

[Captain Spod]

I think I'm reading this differently to the others. If you mean that the company wants you to take a lump sum of �7500 so that they can end their responsibility for your pension in the future, you'll probably find that it has to be paid into another scheme authorised by the Revenue (HMRC). if so, you won't get to see the money and it will be liable to neither Income Tax nor NI. I'm not sure of the position if you are allowed to take the cash, but if they're that keen for you to take it, why don't they pay any charges etc.?

[New Judge]

Good point Captain.

Perhaps johnbjohn could make it clear what he's being offered.

[johnbjohn]

Thanks for the replies sorry i am not clear of what they want me to do they say that if i accept there offer of �7500 it will be paid straight into my bank account.
Thanks

[johnbjohn]

oh and i am 46 years old

[factor-fiction]

Mu understanding is you can't draw a pension before age 50. Or have you sold off your rights to a old company pension through aan 'unlock your pension'advert- if so you should get some good financial advice before taking the money as most such schemes are rip offs