Trivial Commutation Lump Sum

Trivial Commutation Lump Sum

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A client has received a trivial commutation lump sum in 2018/19. 25% was paid tax free with the remainder subject to BR tax per the P45 issued.

In 2019/20 he has started to receive a monthly private pension of £1,200 per month.

This second pot is obvioulsy more than the £30k limit from all pension plans that is one of the criteria for a pension pot qualifying for such treatment or have I misunderstood this?

What are the tax implications for my client (if any) if this was paid out based on the pension provider not being aware of the value of other pension pots?  

 

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By Accountant A
10th Jan 2020 21:25

CWservices6064 wrote:

This second pot is obvioulsy more than the £30k limit from all pension plans that is one of the criteria for a pension pot qualifying for such treatment or have I misunderstood this?

I think the trivial commutation rules simply permit access to pensions savings. As far as I know, there is no requirement, in considering the limit, to look at all the pensions savings an individual has.

CWservices6064 wrote:

What are the tax implications for my client (if any) if this was paid out based on the pension provider not being aware of the value of other pension pots?  

There's no tax benefit gained - whatever the individual draws, 25% is tax free and the balance taxable.

https://www.pensionsadvisoryservice.org.uk/about-pensions/retirement-cho...

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