Taking pension to avoid tax

wooder

I took all of my personal allowance (£11500) from the taxable part of my pension just after April 5th (month 1) and had to pay over 3.5k in tax. I then had to reclaim this using P55, which was a faff and took nearly three months.

If I had taken the full amount in the following March (month 12) would the pension provider not have stopped any tax and paid me the full amount ?

Also, if I had taken half of it (£5750) in month 6 and the other half in month 12, would I then not have had any tax stopped ?

My pension is a personal pension with flexi drawdown and is fully crystallised and I have already taken my 25% tfls. I have no other taxable income.

zagfles

Depends if they got your tax code sorted, a normal tax code eg 1150L with no M1 or anything after. If they do, then taking it as you suggest won't incur any tax up front.

MichelleUK

wooder wrote: »

I took all of my personal allowance (£11500) from the taxable part of my pension just after April 5th (month 1) and had to pay over 3.5k in tax. I then had to reclaim this using P55, which was a faff and took nearly three months.

If I had taken the full amount in the following March (month 12) would the pension provider not have stopped any tax and paid me the full amount ?

Also, if I had taken half of it (£5750) in month 6 and the other half in month 12, would I then not have had any tax stopped ?

My pension is a personal pension with flexi drawdown and is fully crystallised and I have already taken my 25% tfls. I have no other taxable income.

It all depends on if the pension company has the correct tax code for you. If you check, via your Personal Tax account, before you request a payment you can then see how they will treat your payment.

To answer your question, if the pension co. had a cumulative tax code of 1150L for you, and you had no other income from them in that tax year, either of your two scenarios would end up with no tax being taken.