Pension payment taxed at 45%; any experience with claiming this back early?

EdGasketTheSecond

I have requested a UFPLS payment from my pension, the whole of which is below my tax-free allowance. However I have been informed by the pension provider that 75% of the payment will be taxed at 45% and that I have to claim this back from HMRC. Is there an easy way of doing this as thousands of people must have this same issue? Can it be done before the end of the tax year? Have you found HMRC helpful or awkward in refunding this tax on pensions?

xylophone

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

molerat

There is no way the provider told you it would all be taxed at 45% because it is simply untrue, maybe up to 45%, as you will be taxed using the emergency code of 1250LM1 which with a large sum could well have some of it taxed at 45%.  It is very simple to get an in year refund by filling in the forms available on line but maybe a bit slower than usual in the current climate.  https://www.gov.uk/government/publications/flexibly-accessed-pension-payment-repayment-claim-p55

dunstonh

However I have been informed by the pension provider that 75% of the payment will be taxed at 45%

It is quite possible that some of it will be taxed at 45% but its unlikely it all will be.  Have you misunderstood?

 Is there an easy way of doing this as thousands of people must have this same issue?

yes and yes.

Can it be done before the end of the tax year? 

yes

 Have you found HMRC helpful or awkward in refunding this tax on pensions?

Not at all. Absolute doddle.

[Deleted User]

I'm in the process of reclaiming some tax on pension which was taxed at 40% not 20%, i was told it takes around 30 days to get the money back.

squirrelpie

EdGasketTheSecond said:

I have requested a UFPLS payment from my pension, the whole of which is below my tax-free allowance. However I have been informed by the pension provider that 75% of the payment will be taxed at 45% and that I have to claim this back from HMRC. Is there an easy way of doing this as thousands of people must have this same issue? Can it be done before the end of the tax year? Have you found HMRC helpful or awkward in refunding this tax on pensions?

I guess it's too late for you, but for the benefit of anybody else reading the thread ...

What some people do to avoid this problem is first request a small UFPLS payment from their provider. This is taxed at the emergency rate as discussed but doesn't cause any problem because it is only a small amount. Once the pension provider inform HMRC that they have made this payment, HMRC will send them a proper tax code to use for future payments. Once that has been received any future UFPLS payments from that provider will be taxed more sensibly.

But if you've already done it and now need to reclaim the extra tax, it is easy to do that as others have said.