Pension fiddle

MORRIM

I have already taken 25% of my pension tax free, I have been told today that if I want to take any more it will be taxed at 40% plus my salary will be taxed the same, surely this can't be right it's my money.

Muscle750

Firstly what is your salary from your job?

molerat

You get the 25% tax free and the remainder is added to your total income for the year and tax is due accordingly. Any payment from the pension provider may be taxed on an emergency basis leading to an under or overpayment of tax which will need to be sorted.

Andy_L

MORRIM wrote: »

I have already taken 25% of my pension tax free, I have been told today that if I want to take any more it will be taxed at 40% plus my salary will be taxed the same, surely this can't be right it's my money.

Pension have tax relief on the way in, the quid pro quo of that is that they are subject to tax on the way out.

AnotherJoe

Not enough info.
Age.
Salary.
Reason you need money. eg is it "need" or "want"
Reason you took the whole 25% TFLS. Where is it now?
How much you want to take each year now or did youw ant all of it or so much a month?
If you are still contributing to a pension and if so how much.
How much money yo need / want in retirement.
When you get your state pension.

And somewhat pointlessly but maybe food for thought for someone else, why you didn't investigate the tax implications before starting to take the money than after.

kidmugsy

MORRIM wrote: »

I have already taken 25% of my pension tax free, I have been told today that if I want to take any more it will be taxed at 40% plus my salary will be taxed the same, surely this can't be right it's my money.

Your income is your money; it's still taxed.

dunstonh

I have already taken 25% of my pension tax free, I have been told today that if I want to take any more it will be taxed at 40% plus my salary will be taxed the same, surely this can't be right it's my money.

Technically, its not your money. It is held under a trust for your benefit. However, putting that aside, you can draw it. However, anything you draw after the tax free 25% is taxable as income. If you are in the higher rate band or it pushes you into the higher rate band then you pay higher rate tax.

Income in the UK is taxable unless held in a tax free wrapper.

MORRIM

My salary is £18,000 how much can I get out without falling in to the higher tax bracket
I don't think it matters what I need the money for.
I am sixty in September

jem16

MORRIM wrote: »

My salary is £18,000 how much can I get out without falling in to the higher tax bracket

Around another £25k would still be chargeable at 20%. However as already said, if this was taken all in one month you would be taxed some at 20%, some at 40% and probably some at 45% as it's taxed under an emergency tax code. You would then need to claim back the excess tax taken.

xylophone

You have accessed a pension.

You have taken 25% tax free.

How much more of the pension do you propose taking in this tax year?

This will be taxed as income.

It is likely that the pension company will tax this income on an emergency month 1 basis so that an overpayment of tax will occur.

If so this can be reclaimed in year by submitting the correct form to HMRC.

Otherwise you would wait until the end of tax year reconciliation done by HMRC.

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

atush

MORRIM wrote: »

My salary is £18,000 how much can I get out without falling in to the higher tax bracket
I don't think it matters what I need the money for.
I am sixty in September

Yes, it kinda does matter. As you may have better options. Why draw it when you are still working?

If you drew it when you stopped working, the first 11K would be tax free?