The 2006 A day changes allow for 25% of the pension fund to be taken as tax free cash. My children will finished their education in 7 years time and I plan to retire then aged 58. I'd like to give them a head-start by giving each of them £50k cash which I will fund from my tax free cash (£150K will be less than 25% of the fund) I currently have around £45k in AVC's, and propose to build that element to around £150k in the next 7 years by maximising my ASC contributions. I'm in what's left of the Final Salary scheme which allows additional contributions. The company ASC scheme currently allows me to pay around £13.5k a year which is £7660 my contribtion, £5107 tax relief and a 6% contribution from the company... £766. The investment is spread so unless the world economy goes t*ts up I will also get some growth making the £150K easily achievable.
I plan to downsize and live off my basic Final Salary company pension plus equity released from the house which will be invested.
It seems too good to be true to be able to withdraw the £150K as tax free cash which will be made up of 7 years of my ASC contributions ( £54k), 7 years of tax relief ( £35k), 7 years of company 6% (£5k) and my current fund of £45k. Is the taxman going to let me walk away with the £35K relief he has given me over the 7 years just because I contributed £54k to a pension via the ASC's ? If he is, it's a no-brainer.
I'm going to seek professional advice but wondered if anyone can confirm the above re the tax relief element ?