Recycling tax free cash and income

For financial advisers only

On completion of this module you should be able to:

  1. determine if tax free cash recycling rules have been breached
  2. describe what penalties may apply if tax free cash is recycled
  3. explain what might limit the recycling of pension income

Introduction

The availability of tax relief on contributions makes pensions the most tax efficient way to save for retirement. To prevent clients getting tax relief twice on their pension savings, there are restrictions on taking money out of pensions and reinvesting it back into a pension. It’s therefore important that advisers understand the rules surrounding this to ensure clients don’t incur tax charges.

This module should take around 30 minutes to complete. It includes a short self-assessment quiz to test what you’ve learned and a 30 minutes CII/PFS accredited CPD certificate can be claimed.

This module looks at using pension tax free cash and income to make fresh pension contributions. It covers the rules on recycling tax free cash and when penalties may apply. In addition, it highlights the possible restrictions on funding if the contribution is made from pension income.

Please read our Technical Guide – Recycling tax free cash or income before attempting the self-assessment questions.