Pension Drawdon / HMRC.Advice please.

EraserOfLove

First Time poster. Good morning everyone, thank you for taking the time to read my question.

I am drawing down the 25% tax free element of my pension.The remaining 75%  stays invested in my pension pot.  I am currently not in work and thus not paying tax as i am not earing any income. 

My question is; if the tax free element of my pension exceeds the £12570, (which it does),  do i pay tax on the difference between my allowance and my tax free sum,  or can i claim the tax free element of my pension first?. Apologies for my cackhanded question!

One more question; if my pension provider, Aviva, tax me at the emergency rate on my 25% tax free sum, do i claim back the difference from HMRC?.

For further Info, Ive filled out the online  Aviva tax pension withdrawal calculator and it states that no tax is payable.

My aologies to all for asking such a question in layman's terms . My sincere thanks in advance to anyone that can advise me.

Dazed_and_C0nfused

If you are simply taking a TFLS why would any tax ever be payable on it 🤔.

Why do you think a pension provider would ever tax a TFLS 🤔.

Given you seemingly have unused Personal Allowance have you considered if taking the money you want just as a TFLS is the best option?

EraserOfLove

Thank you for your reply.

 I'm probably guilty of overthinking the TFLS which has led me down the path of self-induced confusion.  It does state in the Aviva pension withdrawal guide,   'that they may use an emergency tax code on the payment', as this is the first time i have drawdown on my pension.

I did read somewhere that the pension provider  will send me a p45 after the payment has been made to me,  which i then use to reclaim from HMRC on-line , a month or so after the payment. 

Thank you for your reply, it really is much appreciated. What you say cuts through my confusion and makes sense.

molerat

I did read somewhere that the pension provider  will send me a p45 after the payment has been made to me

You will only get a P45 if you have completely emptied the pension pot.  If you have made a taxable withdrawal and the pension is still active you will get a P60 at end of year.

If you have not used up your tax allowance elsewhere you can use that up with pension withdrawals so no need to take all the tax free element leaving some of that to grow.

Dazed_and_C0nfused

EraserOfLove said:

Thank you for your reply.

 I'm probably guilty of overthinking the TFLS which has led me down the path of self-induced confusion.  It does state in the Aviva pension withdrawal guide,   'that they may use an emergency tax code on the payment', as this is the first time i have drawdown on my pension.

I did read somewhere that the pension provider  will send me a p45 after the payment has been made to me,  which i then use to reclaim from HMRC on-line , a month or so after the payment. 

Thank you for your reply, it really is much appreciated. What you say cuts through my confusion and makes sense.

I very much doubt it says any of that in relation to a TFLS.

Do you have a link?

EraserOfLove

molerat said:

I did read somewhere that the pension provider  will send me a p45 after the payment has been made to me

You will only get a P45 if you have completely emptied the pension pot.  If you have made a taxable withdrawal and the pension is still active you will get a P60 at end of year.

If you have not used up your tax allowance elsewhere you can use that up with pension withdrawals so no need to take all the tax free element leaving some of that to grow.

Ok , thank you, I Understand, that does make sense.

 The 75% of my pension pot remains active and invested with aviva in a low to medium risk mixed fund. the 25% goes into a drawdown fund. The p60 at year end makes sense. 

dunstonh

I am drawing down the 25% tax free element of my pension.The remaining 75%  stays invested in my pension pot.  I am currently not in work and thus not paying tax as i am not earing any income. 

So, why are you taking just the 25% underdrawn instead of using UFPLS?   You appear to be wasting the 25% unnecessarily.

I very much doubt it says any of that in relation to a TFLS.

It doesn't.   The Aviva calculator is for lump sum withdrawals using drawdown or UFPLS.    It makes reference to emergency tax in respect of the 75% element of the lump sum withdrawal. 

xylophone

Why not accept guidance from Pension Wise on accessing your pension? You can book an appointment/follow the link to "explore your Pension Options" here.

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise

EraserOfLove

Ok. According to my telephone converstations with Aviva, the terms of my with-profits pension  policy which was taken out in 1991, i cannot take installments from my fund, i have to take the 25% in one go.  The rest remaining invested in an Aviva investor multi asset plus 1 fund. The other alternative is to transfer to anthoer pension provider who will allow me to take dawdown in installments. 

I will not be making any further withdrawals from this pension pot  until i am 65. I am currently 58 years old.

Albermarle

EraserOfLove said:

Ok. According to my telephone converstations with Aviva, the terms of my with-profits pension  policy which was taken out in 1991, i cannot take installments from my fund, i have to take the 25% in one go.  The rest remaining invested in an Aviva investor multi asset plus 1 fund. The other alternative is to transfer to anthoer pension provider who will allow me to take dawdown in installments. 

I will not be making any further withdrawals from this pension pot  until i am 65. I am currently 58 years old.

That makes sense, as older pensions are usually less flexible in the way you can withdraw them.

An alternative to transferring to another provider, maybe to transfer to a more modern Aviva pension. Did they not suggest this ?

EraserOfLove

Albermarle said:

EraserOfLove said:

Ok. According to my telephone converstations with Aviva, the terms of my with-profits pension  policy which was taken out in 1991, i cannot take installments from my fund, i have to take the 25% in one go.  The rest remaining invested in an Aviva investor multi asset plus 1 fund. The other alternative is to transfer to anthoer pension provider who will allow me to take dawdown in installments. 

I will not be making any further withdrawals from this pension pot  until i am 65. I am currently 58 years old.

That makes sense, as older pensions are usually less flexible in the way you can withdraw them.

An alternative to transferring to another provider, maybe to transfer to a more modern Aviva pension. Did they not suggest this ?

Thanks for the reply. I just checked and the policy dates back to1990, not 1991. so even older than i thought.  The age of ttthe policy was given as a reason why could not excerise the installment (UFPLS) option, which is called ' option3' in their retirement booklet. 

Aviva are transferring me out of my current with-profits policy , (so the transfer Value), to another Aviva  policy which allows me to use the pension drawdown option, (option 2 in their booklet). They have told me this is the only method i can use to achieve Drawdown, or i can  transfer to an external provider who may or may not give me another option.

Thanks again for you response. Much appreciated.