tax on withdrawal under new rules

SnowMan

mgdavid wrote: »

can the P55 be used to reclaim in the case of a once-per-year flexi-drawdown payment, or is it only for UFPLS?

Almost certainly yes, it can be used for both. There is no distinction drawn in the newsletter to a one off UFPLS or a single income payment through flexi-access drawdown.

The important thing seems to be that your intention is that it will be a single payment in the tax year.

The complicated scenario seems to be if you intend to say take a taxable payment in May and another in December. Then you have to work with your provider to sort out your tax, possible through them putting through notional zero payments in June, July etc.

Hornetgal

I have a pension of £600 pm before tax and I earn £12650 pa working I want to take my small lump sum payment to fund a car as mine has gone, it's only a small lump sum of just over £3000 will I pay tax on it?

dunstonh

Hornetgal wrote: »

I have a pension of £600 pm before tax and I earn £12650 pa working I want to take my small lump sum payment to fund a car as mine has gone, it's only a small lump sum of just over £3000 will I pay tax on it?

Yes you will pay tax as you earn more than your personal allowance. 75% of what you withdraw will be subject to 20% tax. The other 25% will be tax free. That is unless you have already previously taken the 25% tax free amount from the pension. In which case all of it will be taxable.

Remember that you can only take a lump sum from a pension if the pension still exists. If you bought an annuity in the past, the pension no longer exists.