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Can you pay some of your 25% tax-free pension pot into an ISA?

8 replies

Ifailed · 01/04/2023 10:13

I've been told you are not allowed to put some of your pension pot into an ISA if you choose to withdraw some of it once you reach 55, is this the case?

OP posts:
Amboseli · 01/04/2023 13:20

That's exactly what we're planning on doing. Taking the 25% tax free, paying off the mortgage and putting the rest into ISAs. And leaving the rest of the pension pot to grow.

Ifailed · 01/04/2023 15:25

@Amboseli,
That's exactly what was being discussed, I can't find anything on HMRC site to say you can't.

OP posts:
piperatthegates · 01/04/2023 15:30

You can't reinvest the tax free lump sum back into a pension (which gets tax relief on contributions) but there's no reason you can't put it into an ISA (which gets the tax relief on the returns)

Ifailed · 01/04/2023 15:36

You can't reinvest the tax free lump sum back into a pension

So If I had £10k in the bank, and took another £10k out of my "25%", and then paid £10k into a private pension, how would 'they' know where the money came from?

OP posts:
Amboseli · 01/04/2023 15:58

With the new rules you can now put £10k gross into your pension after you've accessed it.

messybutfun · 03/04/2023 13:35

You can’t put £10k cash savings into a pension. Not unless you have at least £10k of relevant earnings.
There are complex rules about recycling pension income, but you can put £7,500 without any questions being asked.
Taking only the tax free cash from your pension does not trigger the money purchase annual allowance.
There’s no reason why you can’t put your tax free cash into an ISA, but you are limited to £20k per year.
We do not generally recommend taking money from a pension to invest in an ISA, unless there is a clear reason for it.

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