Pension drawdown and tax code advice

nomoredebt

I would be grateful for some advice please.  Basically my husband has decided to take his pension money without telling me and for the last 3 years has taken a total of £18000 (this is after fees were taken off).  This has resulted in us now not being entitled to any tax credits and having to pay back nearly four grand. 

He still currently works full time and this month his tax code has changed to BR.  Is this due to him having his pension money or is it because he has a different job role in the company?

He has also asked to withdraw a further £13000 (before fees are applied) to pay the mortgage off as he has realised I have found out.  This is going to effect tax credits again next year.  Could this be why his tax code has changed.I don't understand pensions at all. 

Lastly, according to his payslip he is still paying £26 per month into a pension pot.  He has 8 years left till he retires, is it still worth paying into or should he tell them to stop?

What with no tax credits, I work part time to fit round the kids, his wages reducing due to his tax code and the cost of living rising I can't take much more.  Thanks for reading any advice is helpful. 

molerat

There could be a number of reasons for his tax code changing - recovering unpaid tax, tax code allocated to his pension, his job move means HMRC think he has 2 jobs.  His on line tax account will show what HMRC think is the situation and how his code is derived.  He should also have received a letter showing his tax code make up.

Paying something into a pension is at least going towards filling the hole he is making by robbing his pension pot.

zagfles

For tax and tax credits purposes pension income counts like employment income, ie it's taxable and will count as income for tax credits. The exception is the tax free cash element of the pension. So I presume he's taken more than just the tax free cash part? The BR tax code could be because his personal allowance is used against the pension, he'll need to log into his tax account and see. 

Taking the pension while you're entitled to tax credits means he might be losing over 60% of it in tax and lost tax credits. You need to plan finances jointly if you get tax credits and other benefits, independant taxation is a myth for couples claiming tax credits and means tested benefits. 

dunstonh

Basically my husband has decided to take his pension money without telling me and for the last 3 years has taken a total of £18000 (this is after fees were taken off).  This has resulted in us now not being entitled to any tax credits and having to pay back nearly four grand. 

I bet you have made his life a misery for his action.   If you haven't then you should.     Although you should consider his mental health....

Over the years, I have seen husbands and male partners make really bad decisions on financial matters and hide it from their spouse/partner.   I cannot recall any time that a wife/female partner has done the same against the husband.     Women who exert control over the household financials are often better at it than men who feel embarrassed about their financial failures and will try and hide it.  Often digging bigger holes to try and get out.    

He still currently works full time and this month his tax code has changed to BR.  Is this due to him having his pension money or is it because he has a different job role in the company?

It could be.   The personal allowance is usually applied to the highest income source.  If he did one of these pension withdrawals in this tax year, they may have given that the personal allowance leaving his earned income at BR.  Or it could be the one that he has applied for has triggered it.  

He has also asked to withdraw a further £13000 (before fees are applied) to pay the mortgage off as he has realised I have found out.

What fees are you referring to?  Most providers have no charges for UFPLS. (lump sum withdrawals)
Taking money out of the pension to pay the mortgage down is usually a bad idea. (not just for the reasons you already know).  He is robbing your retirement years to pay for something in your working years.

Lastly, according to his payslip he is still paying £26 per month into a pension pot.  He has 8 years left till he retires, is it still worth paying into or should he tell them to stop?

It is worth it but his actions mean he is limited to £4000 contributions (employer and employee).  At £26 its unlikely he is getting near that but he is legally required to notify the pension provider that he has flexibly accessed his pensions and is subject to the MPAA.  Failure to notify your pension provider within 91 days can see HMRC levy a fine.

Albermarle

Lastly, according to his payslip he is still paying £26 per month into a pension pot.  He has 8 years left till he retires, is it still worth paying into or should he tell them to stop?

Do not want to cause you more worry, but £26 a month is peanuts in pensions terms. If he is taking significant sums out of his pension whilst still working and adding very little, he might not be able to afford to retire at all.

xylophone

Have you and your spouse obtained state pension forecasts?

https://www.gov.uk/check-state-pension

Malthusian

nomoredebt said:

Lastly, according to his payslip he is still paying £26 per month into a pension pot.  He has 8 years left till he retires, is it still worth paying into or should he tell them to stop?

To pile onto what Albermarle said, he has already stopped. £26 per month is neither here nor there. (It won't make you any worse off, however.)

The tax code is not the problem. If he wasn't paying tax via his employment he would have paid it on the pension raid instead. You end up with the same amount in your pocket either way, and if tax has been overpaid it will eventually be rebated by HMRC.

If you are struggling to make ends meet even after he has raided the pension fund he needs a reality check ASAP.

Raiding the pension fund to apologise for raiding the pension fund makes no sense, whether or not he uses it to repay debt. As others have said, it will almost certainly just do more damage in the long run.