Readers' forum : Pension plans

My understanding is that an individual who has deferred drawing their state pension can either benefit from a lump sum payment or an enhanced weekly amount. The lump sum is taxable at the individual’s marginal income tax rate in the tax year the sum is drawn down. So if someone has taxable income of say £50 000 can that be reduced to basic rate for this purpose by making a gross personal pension contribution of perhaps £10 000 in the year?

HMRC’s guidance at EIM74651 states: ‘Any state pension lump sum is taxed at the highest rate of tax that applies on the individual’s total income. This highest rate is the one that applies after the set-off of all reliefs and allowances that are deducted in “arriving at” and “from” total income. This rate of tax is commonly referred to as the individual’s “marginal rate”.’

In this case...