My father died (aged 73) and his pension was above the LTA. He had fixed his "LTA" at 1.5M a few years back.
1. If I choose income drawndown I understand I pay tax at 25% up front and then at my income tax rate on top. Is that only on the portion of the pension above the 1.5M LTA?
2. Who tracks the portion that I pay tax on? I mean the pension may continue growing so the 1.5M that is not taxed could become 1.6M next year and so on. So do I keep paying tax until it is under 1.5M?
3. Do I have to pay the 25% LTA charge out of the pension? Or can I pay it out of my other income?
Thanks! I'm green but learning.
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