Tax Treatment of Pension Income
- In most cases, 25 per cent of your fund can be withdrawn free of tax, at any time after you have reached the minimum retirement age.
- Whether taken as income drawdown or as annuity income, your remaining pension will be taxed as income at your normal rate.
- Once you have started taking your pension income (other than your tax free lump sum), your Annual Allowance for further contributions into your fund will be reduced.
- If your pension savings exceed the Lifetime Allowance (LTA) at the time of accessing your pension (other than your tax free lump sum), you may be subject to a tax charge on the excess.