Is pension drawdown taxable?



Having come into force as part of the Pensions Act 1995, pension (or income) drawdown lets you flexibly access your pension, allowing you to either invest it, or draw an income from it.

In terms of tax, the first 25% of your pension funds withdrawn are tax-free, with the remainder being taxed at your regular rate of income tax, minus any allowances you are eligible for.

 

Sources

http://www.hl.co.uk/pensions/drawdown/how-does-it-work

https://www.moneyadviceservice.org.uk/en/articles/income-drawdown

 

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