UFPLS withdrawal, savings interest and tax

Steve_666_

molerat said:

eastcorkram said:

dunstonh said:

waveyjane said:

Doctor_Who said:

You can mitigate emergency tax by taking a small UFPLS withdrawal (say £1000) and then wait for your tax code to be updated by HMRC.

Just a question on this point: I assume this is the "month 1 problem", which I was reading about here? They seems to imply there is a difference between UFPLS draw down and simply taking regular payments - but I'm not sure. 

The first access to the 75% element of the pension will be subject to LM1.   It doesn't matter if you are monthly, half yearly, yearly or ad-hoc.  

The only difference is that monthly will correct itself over the remainder of the tax year as by month two, the correct tax code will be in place.

You've got more confidence in HMRC than I have.

When I took my first small payment the correct tax code was applied to the pension account 2 days later.  It is automatic computer generated, only a complicated tax scenario would cause a problem.

How small a UFPLS payment can you take and still trigger HMRC to update the tax code, £250, £100...

dunstonh

Steve_666_ said:

molerat said:

eastcorkram said:

dunstonh said:

waveyjane said:

Doctor_Who said:

You can mitigate emergency tax by taking a small UFPLS withdrawal (say £1000) and then wait for your tax code to be updated by HMRC.

Just a question on this point: I assume this is the "month 1 problem", which I was reading about here? They seems to imply there is a difference between UFPLS draw down and simply taking regular payments - but I'm not sure. 

The first access to the 75% element of the pension will be subject to LM1.   It doesn't matter if you are monthly, half yearly, yearly or ad-hoc.  

The only difference is that monthly will correct itself over the remainder of the tax year as by month two, the correct tax code will be in place.

You've got more confidence in HMRC than I have.

When I took my first small payment the correct tax code was applied to the pension account 2 days later.  It is automatic computer generated, only a complicated tax scenario would cause a problem.

How small a UFPLS payment can you take and still trigger HMRC to update the tax code, £250, £100...

As low as your provider allows.   

The second payment doesn't trigger HMRC to update the code.  The first payment does that.    The second payment is because the tax code will be in place to use by the second month.

Doctor_Who

molerat said:

eastcorkram said:

dunstonh said:

waveyjane said:

Doctor_Who said:

You can mitigate emergency tax by taking a small UFPLS withdrawal (say £1000) and then wait for your tax code to be updated by HMRC.

Just a question on this point: I assume this is the "month 1 problem", which I was reading about here? They seems to imply there is a difference between UFPLS draw down and simply taking regular payments - but I'm not sure. 

The first access to the 75% element of the pension will be subject to LM1.   It doesn't matter if you are monthly, half yearly, yearly or ad-hoc.  

The only difference is that monthly will correct itself over the remainder of the tax year as by month two, the correct tax code will be in place.

You've got more confidence in HMRC than I have.

When I took my first small payment the correct tax code was applied to the pension account 2 days later.  It is automatic computer generated, only a complicated tax scenario would cause a problem.

I also found the automated HMRC system to be quick in updating my tax code with the pension provider. This was also true when I updated my estimated annual pension income in my personal tax account - the tax code held by my pension provider was updated within a couple of days.