Tax code for DC pension

squirrelpie

mika_dm said:

Do you have to do this every financial year or just when you get the first ever payment?

You have to do it the first time you make a withdrawal from a particular provider. After that they receive a tax code from HMRC and use that from then on, from year to year if nothing changes.

waveydavey48

Sorry folks, I didn't provide enough info in my original post.

I have already made one UFPLS withdrawal. In the previous tax year I withdrew £16,666 (ie the personal allowance plus 25%), fidelity took off a lot of tax and I reclaimed it using the form (P55?). I did this just to take advantage of the personal allowance as I had no other income. 

I qualify for my DB pension in February next year. My plan was to ask the DB provider how much I will get in this tax year (ie February and March payments) and take the remainder of the personal allowance from the DC pot, again to take advantage of the personal allowance. ie if my pension payment is, say, £2,570 for Feb and March combined take £13,333 from the DC pot, then going forward try to get a tax code allocated to the DC pot so future withdrawals are taxed at 20%.

I would welcome any further opinions.

Thanks 

Albermarle

waveydavey48 said:

Sorry folks, I didn't provide enough info in my original post.

I have already made one UFPLS withdrawal. In the previous tax year I withdrew £16,666 (ie the personal allowance plus 25%), fidelity took off a lot of tax and I reclaimed it using the form (P55?). I did this just to take advantage of the personal allowance as I had no other income. 

I qualify for my DB pension in February next year. My plan was to ask the DB provider how much I will get in this tax year (ie February and March payments) and take the remainder of the personal allowance from the DC pot, again to take advantage of the personal allowance. ie if my pension payment is, say, £2,570 for Feb and March combined take £13,333 from the DC pot, then going forward try to get a tax code allocated to the DC pot so future withdrawals are taxed at 20%.

I would welcome any further opinions.

Thanks 

Looks a good plan but from my limited experience you might find the DB scheme a bit wary of giving you an exact figure in advance , so you might have to estimate and maybe reduce the DC withdrawals a bit to be on the safe side.

Dazed_and_C0nfused

Albermarle said:

waveydavey48 said:

Sorry folks, I didn't provide enough info in my original post.

I have already made one UFPLS withdrawal. In the previous tax year I withdrew £16,666 (ie the personal allowance plus 25%), fidelity took off a lot of tax and I reclaimed it using the form (P55?). I did this just to take advantage of the personal allowance as I had no other income. 

I qualify for my DB pension in February next year. My plan was to ask the DB provider how much I will get in this tax year (ie February and March payments) and take the remainder of the personal allowance from the DC pot, again to take advantage of the personal allowance. ie if my pension payment is, say, £2,570 for Feb and March combined take £13,333 from the DC pot, then going forward try to get a tax code allocated to the DC pot so future withdrawals are taxed at 20%.

I would welcome any further opinions.

Thanks 

Looks a good plan but from my limited experience you might find the DB scheme a bit wary of giving you an exact figure in advance , so you might have to estimate and maybe reduce the DC withdrawals a bit to be on the safe side.

Or leave the DC withdrawal at £10k and if you end paying a bit of tax overall at least Rishi Sunak will be pleased.

NedS

Dazed_and_C0nfused said:

Albermarle said:

waveydavey48 said:

Sorry folks, I didn't provide enough info in my original post.

I have already made one UFPLS withdrawal. In the previous tax year I withdrew £16,666 (ie the personal allowance plus 25%), fidelity took off a lot of tax and I reclaimed it using the form (P55?). I did this just to take advantage of the personal allowance as I had no other income. 

I qualify for my DB pension in February next year. My plan was to ask the DB provider how much I will get in this tax year (ie February and March payments) and take the remainder of the personal allowance from the DC pot, again to take advantage of the personal allowance. ie if my pension payment is, say, £2,570 for Feb and March combined take £13,333 from the DC pot, then going forward try to get a tax code allocated to the DC pot so future withdrawals are taxed at 20%.

I would welcome any further opinions.

Thanks 

Looks a good plan but from my limited experience you might find the DB scheme a bit wary of giving you an exact figure in advance , so you might have to estimate and maybe reduce the DC withdrawals a bit to be on the safe side.

Or leave the DC withdrawal at £10k and if you end paying a bit of tax overall at least Rishi Sunak will be pleased.

...and more importantly you will have maximised use of your tax free allowance, hence I'd rather go slightly over than slightly under. Paying (a little) income tax is generally a good thing - it means you have a higher income, which is a good thing.