Initial tax on SIPP lump sum

Underconstruction

Planning to take a modest sum from the tax free part of my SIPP at 55 and have started reading around the mechanics of it.
If I understand it correctly, it would appear that in the absence of the correct tax code, any initial withdrawal is treated as a 1/12th proportion of annual income!? My £20,000 withdrawal would therefore be multiplied up to £240,000 and I would in theory owe tax on that (clearly the £20k is gone at that point?)
Ive read that the corrective measure is achieved by submitting a form which can be processed within about a month? Presumably, at that point I get my money and my code is then correct?
Does anyone have any experience of this anomaly or know if it can be avoided in any way?

molerat

If you are taking purely the tax free element then no tax will be deducted.

xylophone

https://adviser.royallondon.com/technical-central/pensions/benefit-options/emergency-tax-and-lump-sum-withdrawals/

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/flexi-access-drawdown-vs-ufpls/

Dazed_and_confused

It really isn't an "anomaly" it's how PAYE works when the emergency tax code is used on a non-cumulative basis.

Similarly if you only took £1,000 of taxable pension income no tax would be deducted from the first payment as the emergency tax code allows £1042 to be paid before any tax is deducted.

But that's all irrelevant as you seem to have completely missed the point that pension providers will only deduct tax (where necessary) from taxable payments, not the tax free element you say you are taking.

If the £20,000 was taxable and the emergency tax code was being used on a non-cumulative basis then the tax deducted would be £7,280.65.