Tax on withdrawal of Pension Funds 26 June 2022 at 2:26PM in Cutting tax 11 replies 263 views

Albermarle

It just seems ridiculous that Prudential cannot explain to HMRC that this is a one off pay-out. HMRC could tell them my tax code. They could even advise them of my regular income and what % to take off. 

AFAIUI, it does not work like that. HMRC will not issue a tax code until the first payment is made. I presume it is because issuing provisional codes for payments that may or may not happen is an admin nightmare.

For example how would the Pru know ( or HMRC ) that you might take another pension lump sum in the following months from another provider. 

In the end you will get any overpaid tax back.