TFLS when you have lots of small pots

[Fluke]

If you have say 4 private pension pots containing the following amounts:

1. £170k
2. £20k
3. £5k
4. £5k

and you want to take your 25% tfls from the total £200k (£50k), do you have to amalgamate them into one pot first? or is there some way you can withdraw the £30k from the 3 smaller pots and close those accounts, and the remaining £20k from the bigger one keeping the rest (£150k) in situ for future drawdown?

[BullDog]

If you have say 4 private pension pots containing the following amounts:

1. £170k
2. £20k
3. £5k
4. £5k

and you want to take your 25% tfls from the total £200k (£50k), do you have to amalgamate them into one pot first? or is there some way you can withdraw the £30k from the 3 smaller pots and close those accounts, and the remaining £20k from the bigger one keeping the rest (£150k) in situ for future drawdown?

I would take the two £5k pots as a small pot withdrawal. You can do it up to 3x up to £10k a time and it has no effect on any other pension transactions.

[defbref]

If you have say 4 private pension pots containing the following amounts:

1. £170k
2. £20k
3. £5k
4. £5k

and you want to take your 25% tfls from the total £200k (£50k), do you have to amalgamate them into one pot first? or is there some way you can withdraw the £30k from the 3 smaller pots and close those accounts, and the remaining £20k from the bigger one keeping the rest (£150k) in situ for future drawdown?

I would take the two £5k pots as a small pot withdrawal. You can do it up to 3x up to £10k a time and it has no effect on any other pension transactions.

However that doesn't really answer the question, small pots are still 25% tax free and the rest taxable. Of course depending on other income, the taxable part could attract 0% tax.

There's no way to take the overall 25% tax free of several pots from smaller pots, without combining, its 25% tax free of each pot individually.

[Fluke]

However that doesn't really answer the question, small pots are still 25% tax free and the rest taxable. Of course depending on other income, the taxable part could attract 0% tax.

There's no way to take the overall 25% tax free of several pots from smaller pots, without combining, its 25% tax free of each pot individually.

Yes! That's what I thought. Thanks for confirming.

[EmptyGlass]

There are some changes in the new tax year, there will be a single Lump Sum Allowance (LSA). This gives the flexability of taking all the LSA from one pension, and not others, where a person has multiple pensions.

[Fluke]

There are some changes in the new tax year, there will be a single Lump Sum Allowance (LSA). This gives the flexability of taking all the LSA from one pension, and not others, where a person has multiple pensions.

I didn't know this. I wonder if it works the other way where you can take all the funds from say 2 accounts and the remainder of your allowance from the third? What would stop any of the providers automatically deducting tax? How do they know it's only part of your LSA? There's something about it here but can't say it's very clear.

https://www.gov.uk/hmrc-internal-manual ... /ptm171000

[ursaminortaur]

There are some changes in the new tax year, there will be a single Lump Sum Allowance (LSA). This gives the flexability of taking all the LSA from one pension, and not others, where a person has multiple pensions.

I'm pretty sure you are still restricted to taking a maximum of 25% tax free from each individual pension. Where it can help is if you had a combination of pensions where if you took the full 25% tax free sum from them all you would exceed the Lump Sum Allowance then by not taking some you would reduce the total lump sum taken to less than the allowance - doing that makes particular sense if some of those pensions are DB pensions where the commutation rate for converting annual pension to tax free lump sum is poor value,