No such thing as a silly question.

Mick-H

I'm going to be drawing down £12000 from my pension pot every year for the next 9 years.
Should l take all £12000 at the start of the year, the end of the year or £1000 per month?
Currently taking £1000 per month which seems the most sensible to me at least, or is there a better option?

mgdavid

once your provider has a tax code from HMRC it doesn't really matter from a tax POV. If the provider charges per withdrawal then obv do it once a year, put it into an interest-bearing account and set up an SO for £1k/month. Thus you minimise fees and you have ready access to the rest of the year's cash in an emergency. Of course the opposite argument is to leave it invested in the pension, gaining a bit extra over the course of the year.

Mick-H

The £12000 will be my only income so no tax involved.

BoGoF

Mick-H wrote: »

The £12000 will be my only income so no tax involved.

There will be if you take £12,000 in month 1 of the tax year.....a lot of tax.

Mick-H

Good point :beer:

BoGoF

Quoting yourself there Mick?

Mick-H

BoGoF wrote: »

Quoting yourself there Mick?

Another good point

vulcanrtb

BoGoF wrote: »

There will be if you take £12,000 in month 1 of the tax year.....a lot of tax.

Shows how much I know about all this! You're saying if you take £12,000 on say, April 7th 2020, and had no further income in that tax year, you'd pay a 'lot of tax' on that £12,000?

Albermarle

Shows how much I know about all this! You're saying if you take £12,000 on say, April 7th 2020, and had no further income in that tax year, you'd pay a 'lot of tax' on that £12,000?

The issue is that HMRC will see a £12K payment in April and assume you will receive the same every month . In other words will see you as having annual payments of £144K and will tax you accordingly ( maybe you would lose nearly half of the £12K in tax ) .
The good news is that a quick call to HMRC and filling in a form ( P55?) will mean all that tax will be refunded .
If you take £1K a month instead then you will not have this problem , although as previously said watch out for the charging structure of your provider . Some charge per payment , some not at all.

GunJack

vulcanrtb wrote: »

Shows how much I know about all this! You're saying if you take £12,000 on say, April 7th 2020, and had no further income in that tax year, you'd pay a 'lot of tax' on that £12,000?

Untl you claim it back - HMRC would assume you'll take 12k every month and tax accordingly, so you have to tell them and claim it back.

vulcanrtb

Ah right, so not as bad as painted further up the thread, then.
That's a relief, and aligns with my original understanding.