Tax element of commutation

[shades]

Fellas, Just had my pension forecast come through and I've been given two figures. One is the maximum lump sum payable ( subject to a tax charge). And the other figure is the maximum tax free cash ( without a tax charge). Does anyone know how the tax charge is calculated? Is it calculated on age? Or on the amount of commutation?. Regards Shades

[bill.advanced]

Fellas, Just had my pension forecast come through and I've been given two figures. One is the maximum lump sum payable ( subject to a tax charge). And the other figure is the maximum tax free cash ( without a tax charge). Does anyone know how the tax charge is calculated? Is it calculated on age? Or on the amount of commutation?. Regards Shades

https://www.fbu.org.uk/circular/fps32006...ommutation

I would contact your brigade pension adviser shades.
But this is the fire brigades union circular on tax and communication.

[shades]

Thanks Bill. I understand that I can't avoid it if taking the max commutatio. But I was just curious as to how it is calculated.

[bill.advanced]

You have ensure that you don’t finish up paying 40% tax shades.
The part of your commutation that is taxable is simply lumped on to your income for that financial year. And if you would have been just below the 40% tax threshold your additional income from the commutation may fall within the 40% bracket.

[shades]

All received.

[strontium dog]

If you are SFRS, you need to speak to Ian Shaw. There isn't much about any of our pension schemes that he doesn't know. Always very helpful.