My Pension scheme is being wound up, some advice please

roy59

Hi all, as you can proberly tell I'm new to the forum so thanks for having me. I have searched through various posts on this forum for some advice on this matter but to no avail. I have been advised that a pension scheme that I had been paying into with a previous employer is being wound up. I have three options available to me one of which is to recieve a lump sum. I think this option is available due to the sum being less than £18000. I know that I am able to recieve 25% of this tax free. All I wanted to know is what percentage of tax I would need to pay on the remaining 75% and whether this would have any future implications on my tax status. Your advice will be gratefully appreciated. Many thanks

Zelazny

The remaining 75% of the lump sum would be treated as earned income, and taxed accordingly.

At the place I used to work (doing admin for schemes that were winding up) we would assess each case on a PAYE basis, then advise the member of the tax that they had been charged so that they could raise it with the tax office if they thought it was wrong (and the tax office would likely raise it with them eventually if it was wrong).

HMRC provide a tax calculator at http://www.hmrc.gov.uk/calcs/paye.htm that you can use to get an idea of what you'd have to pay.

molerat

When the scheme pays out it will be taxed on a 747L M1 basis so unless it is your only income for the year the tax will be wrong. Any overpayment can be claimed back in year by asking for a P53.