Some “retirement tremendous pot” holders have been paying themselves an annual pension revenue of round £3 million every, figures reveal.
Based on HM Income and Customs (HMRC) information for 2023-24, the most important 25 annual pension incomes averaged £2,982,000, rounded to the closest £1,000.
Titan Wealth Planning obtained the figures from HMRC.
It discovered that round 8,000 retirees (rounded to the closest thousand) paid themselves £100,000-plus from their pension pots in 2023-24.
Derek Miles, chief government of Titan Wealth Planning, cautioned that some excessive web value people could doubtlessly see their tax legal responsibility dramatically improve by taking out huge chunks from their pension.
He stated: “Assuming there have been no different revenue streams, somebody taking annual pension revenue in the present day of £3 million can be taking a look at an eye-watering tax invoice of £1,336,202, leaving them with take-home earnings of £1,663,798. In different phrases, they’d lose virtually half their windfall.
“Once you’ve spent a lifetime constructing a retirement tremendous pot, it’s vital to guard it by making the precise kind of withdrawal.”
The figures obtained by Titan below Freedom of Info (FOI) guidelines relate to taxable versatile pension funds.
Below versatile retirement guidelines, pension holders can usually take a portion of their pots tax-free, with the rest topic to tax.
Mr Miles added: “There could also be completely legitimate explanation why excessive web value people could want to draw seven-figure sums from their pots.
“Maybe they want to put money into a enterprise, purchase a yacht to sail around the globe, or they could merely need to assist their youngsters get a foot on the housing ladder.”
Mr Miles added: “Leaving pension funds to youngsters and grandchildren has develop into a central pillar of property planning due to the tax benefits.”
A pension investor paying themselves £100,000 from a personal pot may doubtlessly pay £27,431 in revenue tax, assuming no different revenue streams, Titan calculated.
Mr Miles stated the scale of the tax invoice may additionally doubtlessly rely on whether or not somebody receives the state pension.
Versatile retirement guidelines allow individuals to entry their pensions from the age of 55 at current, whereas the state pension at the moment begins to be paid from the age of 66.
Mr Miles added: “When you’re nonetheless receiving employment revenue whereas drawing in your non-public pension, then this too will add to your tax invoice.”
He urged individuals could need to take into account receiving bespoke recommendation when planning their pension and property.