Changes to the present pension tax rules will allow over 60s to cash in up to two pension pots as a lump sum.
The changes will apply from April 2012, pension pots of up to £2,000 in value can be considered for this treatment.
HMRC will allow 25% to be taken free of tax. The balance will be taxed at individual’s marginal income tax rate, although only two pension pots can be considered.
Winter Fuel Allowance
This allowance is paid tax free. This year the payment is worth £200 per household. If one of the persons eligible is over 80 this increases to £300.
Please note that to be eligible for this payment in 2012 you need to have been born before 5 January 1951. This particular allowance is linked to the current women’s state pension age.
Consequently, men under their own state pension age but born before 5 January 1951 are eligible to claim. It will be necessary to make a formal claim in the first year. The claim form can be downloaded from the link that follows or you can call the help line on 0845 915 1515.