Reclaiming tax on SIPP

Basically you have received a lump of income from HL and they don't have a proper tax code for you because it was a one-off. Of the £3600, £2700 was taxable income. When they look at a standard annual allowance they basically think, "if this person gets £2700 of taxable income in one month, multiply by 12 that's £32400 a year, and a standard personal allowance is £11500 a year, so probably £20900 is taxable, at 20%, which is £4180, which is £348 a month, so we'll withhold £348."

In reality their software is comparing a one-off income with 1/12th of all the standard annual allowances and tax rates, but to prove the maths it's easier to work with recognisable numbers just to sense-check the calculation.

When you've had a tax deduction on your pension income but know you are not going to go over your annual allowance for the year as a whole because it was a one-off, there is a standard HMRC form you can fill out to get reimbursed without having to wait to the end of the tax year and waiting for HMRC to notice (or doing a full tax return). You can get from the .gov website, but HL might tell you when they confirm your gross and net amounts.

HL will not necessarily know how much money you expect to earn over the course of the year and so may not automatically know you have overpaid and are in a position to reclaim, so they might not tell you if you don't ask. But their call centre might tell you how to do it as they are helpful chaps, although if you are not paying for any advice from them they might just suggest you contact HMRC (who again have a phone helpdesk, but might take a lot longer to answer the phone than HL do!)