Here we look at some tax considerations when crystallising pension benefits and making withdrawals.
Except for tax-free lump sums, money withdrawn from pensions is taxed under the Pay As You Earn (PAYE) system. Depending on whether the correct tax code has been applied and/or the timing of the withdrawals, clients may be over or under paying tax on these withdrawals. Our Pension Summary report shows the total income tax paid on a client’s pension drawdown account for the current tax year along with the tax code held by Fidelity.
The standard personal allowance for 2023/24 is £12,570 and so, depending on other sources of income, it may be appropriate for pension clients aged 55 or over to make taxable withdrawals in order to maximise this allowance.
Run your Pension Summary report – select 'Firm' from the left-hand menu of our Client Management facility followed by 'Reporting Services'. You'll then be able to select the report which will be ready within 24 hours.
If you need more help with using the Pension Summary report, you may find it useful to download our user guide.
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Paul Squirrell, our pension expert, clarifies the rules relating to some specific areas of retirement planning.
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