drawdown tax

Amolad

Paul,


I had a similar problem, just contact Inland Revenue and tell them that you don't earn enough to be taxed and to inform HL about your tax (new) code. They were very helpful when I rang up to complain about being taxed at 50% in error on my drawdown income. If it isn't resolved just complete a tax return at year end and you'll get the tax you've paid refunded.


Good luck ... Amolad

dunstonh

MichelleUK wrote: »

But are they charges specifically on drawdown payments? I am aware of the 0.45% fee but I understood that HL do not make any charges to go into drawdown and take payments (other than for a GAD calculation or a CHAPS payment). You have me intrigued now!

I havent looked at their tariff recently but from posts here, the suggestion is that there is no charge for drawdown unless you fully draw within 12 months of opening. Their tariff should be on their website.

Over the last couple of years, many providers have dropped their drawdown charges and charge little or nothing.

If it isn't resolved just complete a tax return at year end and you'll get the tax you've paid refunded.

or complete the relevant P form

sheramber

If you took your drawdown on a monthly basis rather than as one large payment you would not pay any tax as the amount would be below your monthly personal allowance.

zagfles

MichelleUK wrote: »

But are they charges specifically on drawdown payments? I am aware of the 0.45% fee but I understood that HL do not make any charges to go into drawdown and take payments (other than for a GAD calculation or a CHAPS payment). You have me intrigued now!

No specific drawdown charges when I last checked, other than perhaps as you say if you're still on the old capped drawdown.

ETA: from the horses mouth http://www.hl.co.uk/pensions/drawdown/charges-and-interest-rates

pauljohnwilson

They take a handling fee for each draw down. The rate varies, but in this case it was £200

jamesd

pauljohnwilson wrote: »

They take a handling fee for each draw down. The rate varies, but in this case it was £200

On their standard product they eliminated that sort of thing back in early 2015. From then there has been no charge for starting drawdown, taking lump sums or changing income arrangements.

Maybe you were or are using their advice service and the charge was for that instead of their usual product?

pauljohnwilson

Thanks for all the responses here. I contacted HMRC and after the compulsory 30 minute wait spoke to an advisor who was really helpful. In all eventualities, taking a draw down lump sum which exceeds your monthly allowance will result in the monies being taxed. In order to claim this back before the end of the tax year, form P53 must be completed. (some of the questions here are technically impossible to answer - for example - include any interest earned in the tax year - clearly impossible to answer for the year 2016 -17 when applying in June 2016). The form will then be assessed and a tax refund determined

neilvw

Could you clarify the £200 handling fee as mentioned above?

dunstonh

some of the questions here are technically impossible to answer - for example - include any interest earned in the tax year - clearly impossible to answer for the year 2016 -17 when applying in June 2016)

For most people the answer will be nil as its only interested in taxable interest. And it does say estimate

zagfles

dunstonh wrote: »

For most people the answer will be nil as its only interested in taxable interest.

Why do you think that? I'd imagine most people will have some taxable interest, and interest within the new savings allowance will have to be declared as it can affect tax.