I hope someone can provide the basic for me !
I'm already in receipt of a defined benefit annual company pension from which I took a maximum 25% tax free lump sum.
This pension took up 96% of my pension personal lifetime allowance.
The income from this pension places me in the 20% income tax bracket.
I also have a second deferred defined benefit pension from a different company and I now need to make a decision on the options available in taking this one. There are two main options I wish to consider:
1) Just take it as annual pension, or
2) Take a lump sum (say, 25%) and an appropriately reduced annual pension
I'm told by the pension provider that either of the above options will take up circa 10% of my lifetime allowance.
So I will then be 106% (96% + 10 %) of my personal lifetime allowance, so incurring a tax penalty charge when I come to draw this second pension.
The additional income from either option above will keep me in the 20% income tax band.
Which of the two options above will minimise my tax liability?
Thanks in anticipation.
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