Paying tax when not earning enough

molerat

There is no drawn out debate when reclaiming lump sum tax overpayments.  Fill in the form and submit on line, as simple as that. How do pension providers know you do not have to pay tax - when HMRC tell them.  How do HMRC know that you need not pay tax - when they are told how much you are getting paid.  Try to bypass the system and you will end up going round in circles.  You may be able to avoid paying tax on the monthly pension but you need to get all the details to HMRC well in advance of the first payment which will likely take a long drawn out debate with HMRC.  Once the first payment is reported by the provider setting up a tax code is far simpler.

sparky0138

molerat said:

There is no drawn out debate when reclaiming lump sum tax overpayments.  Fill in the form and submit on line, as simple as that. How do pension providers know you do not have to pay tax - when HMRC tell them.  How do HMRC know that you need not pay tax - when they are told how much you are getting paid.  Try to bypass the system and you will end up going round in circles.  You may be able to avoid paying tax on the monthly pension but you need to get all the details to HMRC well in advance of the first payment.

Sorry, molerat, don't know if this is in response to my question. I only asked because form P55 says you can only use the form to claim a refund on a flexibly accessed pension payment if:

• you've flexibly accessed your pension pot, but not emptied it
• you're not taking another flexible payment before the end of the tax year
• the pension body is unable to make a tax refund

That's why I asked if there was a way of reclaiming now if you're going to take another lump sum.

xylophone

https://adviser.royallondon.com/technical-central/pensions/benefit-options/emergency-tax-and-lump-sum-withdrawals/
You will note from this that individuals who intend to make further lump sum withdrawals and/or take income in the current tax year are expected to wait until HMRC issue the revised tax code. This is why there is no form which covers this situation. 

Rolyan

Thank you everyone, I think I understand now.