HL 2880 to 3600

molerat

You can get the tax codes changed now.  If they are the only 2 income streams this year then you can change the expected income of each to the correct amounts and see what HMRC then allocate, make sure you add a bit to the HL as you will be getting interest on any balance held at 3.45%.  There should be no reason for the M1 against HL which causes complications. Get the codes changed then if they continue with the M1 you can contact them to get it removed.

1/12th of the annual allowance for each code is used each month so for 288 you get £240.75 tax free each month adding up across the year (except for the fact they have added M1 which makes that £240.75 stand alone each month).  So as an example if you took £2700 taxable from your pension this month, having not taken any previously this year, only £1444.50 would be tax free even though the £2700 is below the £2889 afforded by the tax code but if you took it in March the whole £2889 would be available and no tax would be deducted.  Taking it early means you would need to reclaim the tax deducted.

otb666

upped my tax code to accommodate £5400 for HL second withdrawal £3600 before march 2024. I will then change it back to  £2700 after april 2024 and pay the £2880 back in after 1/4/24 then withdraw again in march 2025.and pay back in after April 2025 and repeat

otb666

chnaged income from HL to 2700 and will pay 2880 into HL next week

otb666

i have added 2880 into HL and will withdraw 3600 before Jan25

otb666

I have already withdrawn 3600 (3376 received as assume i have been taxed 224 which i should get back in June 25)
It took from 15/9-28/10 to receive money into my bank account.  Just noting for myself really

otb666

2880 paid into cash sipp top up 720 expected 21/7  expecting 224 tax to be repaid before then. Then withdraw around sept.2025 just adding notes for myself really

ukdw

otb666 said:

upped my tax code to accommodate £5400 for HL second withdrawal £3600 before march 2024. I will then change it back to  £2700 after april 2024 and pay the £2880 back in after 1/4/24 then withdraw again in march 2025.and pay back in after April 2025 and repeat

Minor point on this fairly old post - but the new tax year is 6/4 - not 1/4.

Also I think HL only do the tax reclaims once per month - so it might be worth leaving paying in to the start of May.

Plus I would then do the draw down as soon as the refunded tax appears - rather than leaving until  near the end of the tax year.

otb666

Have requested 3600 today had tax rebate in June. On a separate note can i open a normal isa with my bank and put 20000 in it this year following inheritance or is it limited to 10000 now ?

MallyGirl

otb666 said:

On a separate note can i open an isa with my bank and put 20000 in it this year following inheritance or not ?

If you have not used any of this year's ISA allowance then yes. The fact that the source of money is an inheritance is irrelevant 

dunstonh

Also I think HL only do the tax reclaims once per month - so it might be worth leaving paying in to the start of May.

I suspect that no provider submits the return to HMRC more than once a month.   HMRC don't deal with it daily.  

Effectively, the pension provider reports to HMRC on contributions due relief between 6th and 5th of the month.   HMRC pay the total amount of relief as a single amount oto the provider on the 20th of the following month.

e.g. 6th September to 5th October gets the fund on 20th November (with most applying it overnight to appear on the 21st).

Only where the provider prefunds tax relief will it appear earlier (that tends to be the traditional providers).  Prefunding uses millions of pounds of the providers money.   So low-cost platforms or platforms with lower resources won't be pre-funded.

Prefunding is worth around 0.07% p.a. , if you make contributions, but it's invisible.  i.e., if you have a provider charging 0.40% with prefunding and you are making regular contributions, then you are likely to be better off than with a provider that charges 0.34% without prefunding.