Spend your pension pot last to defend savings from taxman

Hoard your pension and spend other available cash and investments first, to keep your money out of the taxman's clutches. But anyone who wants to minimise their annual income tax, or use up their capital gains tax allowance efficiently, might also benefit from running down assets held outside a pension first. 1) Investments held outside Isas or other tax-efficient wrappers, like shares, bonds, funds and buy-to-let properties, all of which could be subject to capital gains tax or inheritance tax. 5) Pension pots invested in income drawdown schemes, because these remain a tax-efficient wrapper for your cash, like pensions in the run-up to retirement, and have inheritance tax benefits. He says it's usually straightforward and free to convert a stakeholder pension, but some personal pensions apply exit charges and in these cases it can be worth waiting until the scheme's retirement age before switching into one offering succession drawdown He goes on: 'Due to the introduction of succession drawdown, an individual who has a pension that offers this facility can now cascade their pension assets to their family, free of inheritance tax.