Adviser > Individual > Drawdown > Capped Drawdown
Capped Drawdown
If a client has not yet started taking income from an income drawdown plan will they be limited to 100% of GAD?
If the client has taken TFC that counts as a benefit crystallisation event. Assuming this took place prior to 6 April 2011 the client will be subject to a maximum income of 120% GAD until the 5th anniversary of their last GAD review date.
My client does not need his full TFC or maximum income. Would he be better off crystallising his full plan and taking less than 100% GAD or leaving some of the fund uncrystallised and taking maximum income?
Generally it is more tax efficient to crystallise the minimum amount needed to provide the client’s lump sum and/or income needs.
In the event of death before age 75 any lump sum payments from crystallised funds would attract a Recovery Tax charge of 55% of the fund value, whereas uncrystallised funds would not.
It would also be possible for the client to crystallise more as and when they needed it.
For professional advisers only
