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If you’ve been saving all your working life to fund your retirement, you don’t want to lose out by paying more tax than you need to. There are also some tax benefits to be aware of that can help you make the most of your savings.
There are a few different ways to help you reduce the amount of tax you pay.
Tailored Drawdown: Some pensions give you more freedom around how often you can take cash from your pot. Some let you take out cash as either phased payments of tax-free cash, taxable income or a mixture of the two.
This could help you take a retirement income more tax-efficiently. You can even change how you take your money depending on your situation. Keep in mind that you might need to get specific financial advice if you’re thinking about this option.
These tips should not be regarded as financial advice. The right approach for you will depend on your individual circumstances. If you would like financial advice you can speak to your existing adviser or arrange a consultation with one of our qualified financial advisers.
This information is based on our understanding of taxation legislation and regulations in April 2020. The legislation and regulations can change. Your personal circumstances and where you live in the UK also have an impact on tax treatment.
We have a handy guide to how your pension and retirement income is taxed. It goes into more detail around tax relief, limits and more.
We recommend you seek appropriate guidance or advice before you make any decisions. An adviser is likely to charge a fee for this. You can also get free impartial guidance over the phone or face to face with Pension Wise. Go to pensionwise.gov.uk or call 0800 138 3944 (call charges will vary). Make sure you understand all your retirement options by reading the Money Advice Service guide – Your pension: your choices .
We have more useful guides and tools to help you save and prepare for life after retirement.