tax on lump sum pension
Posted: Wed Sep 13, 2017 12:15 pm
my friend is a 56 year old male, he sold his business and now doEs not work and lives on his savings he has been doing this for the last 2 years and plans to keep doing this for another year. His only income is through a house that he lets out and he makes around 8K a year through that. He fills in a self assessment and this year for the first time he didn't have to pay any income tax as he is now a basic tax rate payer. He has just cashed in a forgotten personal pension for the full amount of £12k as it was a small amount he decided to take it all as a lump sum . He has been taxed on this approx. £2k .My question is will he be able to reclaim this amount now or in the future as it seems he has not used all this years tax allowance with only earning the 8k or will he have to wait until next tax year when he will be earning around the same amount of 8K... or is a pension lump sum taxed differently. thanks for any advice.