Post April 2016 Flexi-Drawdown taxation.

SallyG

http://www.ariespensions.co.uk/public/analysis/19122014.htm
refers to this

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/388351/Newsletter_66_-_december_2014.pdf
"If a scheme administrator already makes payments to a member and has a tax code for those payments, the tax code should only be used for additional payments if the payments are being made at the same time. If more than one payment in a month is
made and the same tax code is operated against each of those payments it could give the benefit of the tax allowances and rate bands twice.
In all other circumstances, including where individuals have a P45 from the previous tax year, the scheme administrator should use the Emergency Code on a Month 1 basis against the first payment and HMRC will issue a tax code to operate against future payments.
The Emergency Code for the 2015 to 2016 tax year will be 1060L.
Scheme administrators who already operate a tax code against one payment stream under one PAYE reference, cannot use the same tax code against a second payment stream under a separate PAYE reference. Emergency Code on a Month 1 basis must be operated against the new payment stream until HMRC issues a tax
code to operate against future payments."

mgdavid

did you have a question? or is this in response to another's question?

SallyG

No - not a question or an answer - just sharing information.

mgdavid

thankyou; can you give an example of someone to whom this might apply?

greenglide

It seems to me to be the standard way that taxation works.

I assume that multiple pension payments paid separately do not expect to run a single income tax scheme as a normal employer would keep a single pay and tax to date and use that to calculate the tax, pension schemes tend not to.

mgdavid

greenglide wrote: »

It seems to me to be the standard way that taxation works..........

thanks gg, that's what I thought, from my very limited experience.

SallyG

For those of us who've experienced direct contact with HMRC it helps to see a definitive version of what should happen.
There's so little official information on how the new rules will affect people already in drawdown - any found is like gold dust.

So....bear with me please ...... for someone like me already in drawdown, - if, in the new tax year 2015/16, I decide to draw down more than the usual one-off annual amount I've taken for the past 4 years, it will be simpler to take a larger one-off amount at the same date as before, rather than taking further payments later in the year - simply because that way the pension company can apply a "proper" tax code based on my real income rather than an emergency tax code?

mgdavid

SallyG wrote: »

For those of us who've experienced direct contact with HMRC......

Is that special? I thought we all did.
I'm just entering flexible DD and have already spoken with HMRC and agreed a position. My Tax Code is allocated against my largest DB pension, the small DB pension and a small annuity use BR code. I will take one ad-hoc DD amount per year, calculated to just stay out of HRT so that will use BR code also. So far, so good; cross fingers!