![]() You can either convert to flexi-access drawdown or keep capped drawdown. If you're in a capped drawdown arrangement you have set up under the old rules, you have two options. If you're in a flexible drawdown plan, this automatically converted to flexi-access drawdown from 6 April 2015. What happens if I'm already in pension drawdown? This makes it extremely important to complete your provider's 'expression of wish' form, declaring who should inherit your pension pot. The inheritors of your pension will pay tax at their marginal rate of income tax, whether they take the remaining fund as a lump sum or as a regular income from a drawdown plan.Īnother important change is that death benefits can now be left to anyone you choose, not simply dependents (such as your spouse). This could be taken as a regular income from your drawdown plan, or as a whole lump sum. It used to be a whopping 55%.Īll pension funds left by someone who dies under the age of 75 can be inherited tax-free. The amount of tax paid on your remaining pension when you die has been cut. Income taxes in Scotland work differently.įind out more: Tax on pensions - see how much you might pay on a lump sum What happens to my pension drawdown plan when I die? These figures apply to income tax in England, Wales and Northern Ireland. So if you took out £50,270, and had no other income from private pensions and the state pension, you'd have a tax bill of £7,540 after taking your £12,570 tax-free allowance into account.
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