Income tax on flexi drawdown pension

dealyboy

... of course the tax system is not income efficient for single payments ... so although tax will not be due on income under annual allowances, it may (and probably will) be deducted and need to be claimed back.

artyboy

dealyboy said:

... of course the tax system is not income efficient for single payments ... so although tax will not be due on income under annual allowances, it may (and probably will) be deducted and need to be claimed back.

And that's why a lot of people do drawdown as a single annual withdrawal in March, so that they are not hit with additional tax that has to be reclaimed.

Doesn't work the first time you withdraw (something I just learned) because you'll end up being taxed on a M1 basis. But for future years you should be ok...

molerat

artyboy said:

dealyboy said:

... of course the tax system is not income efficient for single payments ... so although tax will not be due on income under annual allowances, it may (and probably will) be deducted and need to be claimed back.

And that's why a lot of people do drawdown as a single annual withdrawal in March, so that they are not hit with additional tax that has to be reclaimed.

Doesn't work the first time you withdraw (something I just learned) because you'll end up being taxed on a M1 basis. But for future years you should be ok...

Yep.  Mine comes out at the start of the year as I have a BR code.  Mrs M has always had a number code so has taken the full lump sum in different months each year according to that allowance, now March since reaching SRA.