First SIPP Drawdown

Mazer

I have been in receipt of a small DB pension since 2021 and want to start drawing down from my SIPP up to my personal tax allowance for 2023/24. Can someone please advise me how I can withdraw from my SIPP without HMRC taking off tax. I won't pay tax in 2023/24 as my DB plus SIPP withdrawal will take me up to my personal allowance. I have used this current year's tax allowance with payments from my DB plus another small DC pension. Should I take a tiny payment in April to get a tax code? 

zagfles

Yes you could do, but any further withdrawals will be taken PAYE so if you take them early in the tax year you'll pay tax but would get it back later in the year if you make small withdrawals. Assuming you get a cumulative tax code.

Dazed_and_C0nfused

That would be a start yes.

Then you will have three pensions from HMRC's perspective.

Once the SIPP provider has reported the first payment and you can see this as a new source of income on your Personal Tax Account you can update each one to show how much you expect to be paid in (taxable) income in 2023:24.

For example

DB £10,000
DC £0
SIPP £2,570

That will prompt a tax code review and you will have tax codes,

DB 1000L
DC BR
SIPP 257T

The above assumes you have applied for Marriage Allowance and aren't either Scottish or Welsh resident for tax purposes.

Pat38493

There is also an option in the personal tax account online where you can tell HMRC what you expect to earn in the tax year - does this not work if you are on pension income?  I have used it with my employment income in the past to correct assumptions that they made about my income.

Dazed_and_C0nfused

Pat38493 said:

There is also an option in the personal tax account online where you can tell HMRC what you expect to earn in the tax year - does this not work if you are on pension income?  I have used it with my employment income in the past to correct assumptions that they made about my income.

Yes pension income (other than the State Pension) and employments are treated the same by HMRC.

But there's nothing you can do until the pension payer (or employer) has reported the first payment.