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Divorce/separation

Here you'll find divorce help and support from other Mners. For legal advice, you may find Advice Now guides useful.

Pension question

4 replies

TeaCakeandWarmHugs · 16/02/2023 19:47

Hi,
Does anyone know if this is true?

If you are at an age when you can cash in some of your pension then the first 25% will be tax free and anything after that will be at 40% tax?

My new solicitor has told me this as my stbx has cashed in some of his pension and his figures are proving that my stbx’s pension value is a lot more than what myself and my previous solicitor group were told. They have also not provided a CTV?? of his pension whereas I did.

Has anyone heard of this as the amount he has cashed in (if 25%) indicates his pension is of higher value than what we thought. He is basing his guess on the fact that he wouldn’t pay 40% tax on anything over the 25%. New solicitor seems a
lot more switched on and has demanded a full pension breakdown and proof.

OP posts:
TeaCakeandWarmHugs · 16/02/2023 19:48

CEV not CTV

OP posts:
waterSpider · 16/02/2023 21:07

CETV, I think. cash equivalent transfer value.
A lump sum of up to 25% is tax free, as you say.

Then if taken as income it's subject to tax at your tax rate, which could be 0, 20, 40 or 45 depending on the size of the pension and other income.

TeaCakeandWarmHugs · 16/02/2023 21:33

But what if a lump sum of, say, 40% was taken. Does that mean 25% is tax free and the other 15% is taxed at 40%?

OP posts:
Marmight · 18/02/2023 09:28

The other 15% could be taxed at 40%. It could also be taxed at 0%, 20% or 45% depending on your STBXDH's total income for that tax year.
The amount it is being taxed gives no indication of the overall pension fund size.

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