Winding up lump sum

tartyarmy

I received a letter about my pension from an old job winding up. Says I have £7858 I can take as cash minus tax just wondered if anyone knows how much tax I will pay on this? I'm a student working part time so don't earn a lot right now many thanks

jem16

tartyarmy wrote: »

I received a letter about my pension from an old job winding up. Says I have £7858 I can take as cash minus tax just wondered if anyone knows how much tax I will pay on this? I'm a student working part time so don't earn a lot right now many thanks

25% will be tax-free and the rest taxed as your normal income. So depends on how much you earn.

molerat

But ..... the payment will be taxed on a 944M1 basis so you will receive £6439 after having tax of £1509 deducted which, depending on your tax circumstances, probably means a tax overpayment of at least £331 which can be reclaimed in year. See http://www.hmrc.gov.uk/pensionschemes/small-pen.htm#4