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Taking pension pot early, bit confused about tax
Iwanttobefree
Posts: 2,534 Forumite
Hi
I'm taking my small pension pot (about £10,800) now due to ill health.
I'm 55 next May when this particular pension was due. I've discussed all the options (other pensions etc in another thread a while back)
The only thing I'm a little confused about is the tax.
I can take 25% tax free, I presume that means that 25% doesn't count towards my yearly amount I can earn before paying tax?
My pension company will take tax off of the remainder (I believe it's 20%) and pay whats left to me.
As I'm unable to work due to ill health, and I don't qualify for any benefits, my income this year is zero.
So, I presume my tax on the whole amount should be zero as I'm below my allowable earnings before tax?
That being the case, do I have to wait for the end of the tax year before I claim the tax back from HMRC or can I do it as soon as I receive my pension pot?
I went to the HMRC site and found the options confusing, there was a form to fill out if I had serious ill hearth (less than a year to live) which doesn't apply to me, I couldn't work out which form I should be filling out?
Many thanks
I'm taking my small pension pot (about £10,800) now due to ill health.
I'm 55 next May when this particular pension was due. I've discussed all the options (other pensions etc in another thread a while back)
The only thing I'm a little confused about is the tax.
I can take 25% tax free, I presume that means that 25% doesn't count towards my yearly amount I can earn before paying tax?
My pension company will take tax off of the remainder (I believe it's 20%) and pay whats left to me.
As I'm unable to work due to ill health, and I don't qualify for any benefits, my income this year is zero.
So, I presume my tax on the whole amount should be zero as I'm below my allowable earnings before tax?
That being the case, do I have to wait for the end of the tax year before I claim the tax back from HMRC or can I do it as soon as I receive my pension pot?
I went to the HMRC site and found the options confusing, there was a form to fill out if I had serious ill hearth (less than a year to live) which doesn't apply to me, I couldn't work out which form I should be filling out?
Many thanks
The way things are going, soon we are all going to be victims of something or other.
Who will we blame then?
Who will we blame then?
0
Comments
-
Take out a £1,000 a month until it's gone and there's won't be any tax paid and you won't have to reclaim any.
On top of that, each year pay in £2880 which will get bumped up to £3600 which can can then withdraw getting you a free £720.0
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