Has anyone here done this?

molerat

No, you will simply get a gross taxable, tax deducted, net and tax code used.

Blue_Parrot

saver861 wrote: »

Not sure if I'm reading this right. Are you saying your last known value of the policy was £23,591 which was two months prior to payout? It may well have moved somewhat in those two months so skewing your figures.

Do you not know what the policy was valued at on the day of withdrawal?

This is the most confusing scenario I have ever encountered. No wonder the IFA wanted us to back off. But it's too late now!

No, I/we do not know what the policy was valued at on that day. Maybe some people do this (have you ever tried getting through to the right person with two hours to spare?) I have to say however that they were superfast. I posted the form on Monday last week, the payment came through on Friday of same week.

The other thing I've realised in the midst of all these spreadsheets, is that the recipient will (since the payout is regarded as "income") be pushed into the 40% tax band by the end of this tax year (ie, in April next year). TG I spotted that: I'll have to make further adjustments to The Payroll. Oh well, forewarned is forearmed. Could have far worse problems and for the whole of last year, we did.

saver861

Blue_Parrot wrote: »

No, I/we do not know what the policy was valued at on that day. Maybe some people do this (have you ever tried getting through to the right person with two hours to spare?)

Well anytime I have called in a policy I have always known what the value was on the day. Indeed, I have listened to a deal of music on the phone for sure, but I've not had too much difficulty getting valuations.

Recently we called in an Aviva policy early - I got all the valuations right up to the surrender day. However, Aviva were painfully slow at getting the forms to us. I think it is a designed delay on their part in the hope that the customer has a change of mind about surrendering the policy! Once activated though, they were quick.

I do think you need to get the actual surrender value as it sounds like you are trying to work on figures from two months prior. Is the surrender value not on some of the paperwork that you recieved?

Blue_Parrot wrote: »

The other thing I've realised in the midst of all these spreadsheets, is that the recipient will (since the payout is regarded as "income") be pushed into the 40% tax band by the end of this tax year (ie, in April next year).

Its hindsight now of course, but that is the key prior to the decision. Much of the benefits on taking pension can be eroded if the the tax liability is not fully accounted for. Definitely need to know what amounts to withdraw to keep within a threshold.

Blue_Parrot wrote: »

TG I spotted that: I'll have to make further adjustments to The Payroll. Oh well, forewarned is forearmed. Could have far worse problems and for the whole of last year, we did.

Not sure what adjustments you need to make to the payroll to eliminate the 40% rate for the recipient but would just say take care so not to have the situation blow up again!

Blue_Parrot

The actual figures arrived in the post this morning, and only vary slightly from previous posts.

Total sum = 23,684.32
Tax Free = 5921.09
Taxable = 17,763.23
Tax deducted = 5304.12
(Sum received was £18,380.20)

There is no breakdown of tax deducted figure. The P45s were in the same post, pre-filled in.

Therefore, apply for refund (I have no idea how much) or leave it till next year's tax return ???

molerat

That tax is for a normal 1100 tax code at M2. Strange one.

Blue_Parrot

Is M2 month two? Then we're in month two since it's May, yes?

I've just emailed all that to our accountant.

xylophone

Therefore, apply for refund (I have no idea how much) or leave it till next year's tax return ???

See https://www.gov.uk/claim-tax-refund/you-get-a-pension

Will the recipient of the proceeds of the pension policy be receiving other income in this tax year?

Remember that the amount over and above the PCLS is taxed as income.

badmemory

It looks to me as if they have worked out the tax as month 2 !!! not month 1 !

!!! was cumulative

Blue_Parrot

badmemory wrote: »

It looks to me as if they have worked out the tax as month 2 !!! not month 1 !

!!! was cumulative

Is that a good thing or a bad thing?

To xylophone, yes there is other income.

Sorry for short replies: trying to do three things at once.........

xylophone

What tax code is shown on the P45 - or is it P45s?

You did indicate two policies - a P45 for each?