Savers withdrawing large amounts from their pensions, beyond the 25% tax-free lump sum, may face increased income tax liabilities.
Pension savers considering cashing in large amounts from their pensions could face higher income tax bills. Making withdrawals that exceed the 25% tax-free lump sum allowance has the potential to move individuals into a higher tax bracket.
Additionally, these withdrawals may reduce the extent to which savers can benefit from pension tax relief in the future.
Why this matters: This could impact the net amount savers receive from their pensions and their future tax efficiency.
What this means for you: If you are considering withdrawing a large sum from your pension, you may face a higher income tax bill and reduced future pension tax relief.
Join thousands of readers getting the best of British news straight to their inbox.