Taxation of Fexi Drawdown other than PAYE withdrawals..?
Posted: November 4th, 2019, 6:17 am
Ok, so far my understanding is that once you transfer funds into drawdown the LTA test is done..
All well and good.
Now consider then that the drawdown investments grow and generate dividends etc and some of this is taken as PAYE taxed each year.
What happens to the capital gains and dividends in the drawdown pot? Are they left to grow tax-free and only taxed on withdrawal?
Thats what it looks like to me. But it sounds like a good deal, tax-free gains and only taxable withdrawals?
In which case it would seem to me that the entire pot should be moved into drawdown for maximum flexibility (no point staying in the pension wrapper as it provides no additional benefit there. (gains and dividends tax-free anyway in flexi drawdown)
Then you just decide year to year or month to month what you need etc. (Based on safe withdrawal rate etc)
Did I get that right? Or is there something Im missing?
All well and good.
Now consider then that the drawdown investments grow and generate dividends etc and some of this is taken as PAYE taxed each year.
What happens to the capital gains and dividends in the drawdown pot? Are they left to grow tax-free and only taxed on withdrawal?
Thats what it looks like to me. But it sounds like a good deal, tax-free gains and only taxable withdrawals?
In which case it would seem to me that the entire pot should be moved into drawdown for maximum flexibility (no point staying in the pension wrapper as it provides no additional benefit there. (gains and dividends tax-free anyway in flexi drawdown)
Then you just decide year to year or month to month what you need etc. (Based on safe withdrawal rate etc)
Did I get that right? Or is there something Im missing?