Joslin Rhodes
14:05, Fri 31st October 2014

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Meeting the Minimum Income Requirement

The Minimum Income Requirement (MIR) is the amount that must be payable in the tax year in which you first wish to enter Flexible Drawdown. The current MIR is set at £20,000 (gross) per annum and must qualify as guaranteed lifetime income.
In reality this means that the £20,000 must be received from sources such an a lifetime annuity, occupational pension, or the state pension. Income from pension schemes with fewer than 20 members, typically small self-administered schemes will not count towards the MIR.


The main issue to consider is to make sure that the MIR will be met in the first year of Flexible Drawdown. Put simply, if you are relying on lifetime income from an arrangement that commences part-way through the tax year, a total of £20,000 must still be payable before the tax year end. As an example, if you were to begin receiving income of £20,000 per annum from an occupational scheme on the 1st of May 2011, and you were not yet in receipt of your State Pension or any other guaranteed pension income, you would not meet the required income in the 2011/2012 tax year, and would therefore have to delay entering Flexible Drawdown until the 6th of April 2012 at the earliest.

 

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