This concept was introduced on 6 April 2015 and allows clients to take lump sums directly from uncrystallised funds, as often as they require, without the need to go into drawdown.
Uncrystallised funds pension lump sum (UFPLS) allows individuals to take a lump from uncrystallised funds within their pension scheme, 25% of which is normally tax-free and the balance is assessable income for tax purposes. The lump sum can be taken in one go or in multiple payments.
For each lump sum taken, 25% will be paid tax-free with the balance taxed at the client’s marginal rate of income tax.
Once the first lump sum is taken, the client will be subject to the reduced money purchase annual allowance of £4,000.
Please note: an uncrystallised funds lump sum cannot be taken where the client has primary protection or enhanced protection and protected lump sum rights as at 5 April 2006 of more than £375,000, or where the uncrystallised funds are from a disqualifying pension credit in relation to a pension sharing order on divorce.
Whatever your retirement needs, one of our experts will be happy to discuss how we can help you achieve your goals.