Small sum pension pot

FindMyWayBack

Please advise:
I have about £3,500 in a pension (Pru), I have no savings, no other income, PIP/ESA/HB means tested.
If I take the £3,500 will I get all of it or will there be tax?
Thanks for help. 

Brie

Well normally you might be allowed a 25% tax free lump sum our of it but more worrying might be what happens is you exceed the max you're allowed for any benefits.  PIP should be fine but I'm not sure about the rest.  

And of course if you're under 55 (unless you're a jockey as I recall) you can't have it anyways.  

FindMyWayBack

Won't affect the bens as under £6,000, and no other savings.  I thought you were not taxed if it's less than your personal allowance for the year... well over 55

Silvertabby

Very unlikely that the Pru would have a tax code to work with, so any payment would be 25% tax free and the rest taxed at 20%.  Telling the Pru that you have no other income won't work, as they have to abide by HMRC rules.  ie, no tax code = deduct tax 

You would then either wait for HMRC to pay your  refund, probably at the end of that tax year, or claim it yourself.

FindMyWayBack

Silvertabby said:

Very unlikely that the Pru would have a tax code to work with, so any payment would be 25% tax free and the rest taxed at 20%.  Telling the Pru that you have no other income won't work, as they have to abide by HMRC rules.  ie, no tax code = deduct tax 

You would then either wait for HMRC to pay your  refund, probably at the end of that tax year, or claim it yourself.

Thanks for that, so essentially is all due to me, albeit in a round about way.

Dazed_and_C0nfused

Silvertabby said:

Very unlikely that the Pru would have a tax code to work with, so any payment would be 25% tax free and the rest taxed at 20%.  Telling the Pru that you have no other income won't work, as they have to abide by HMRC rules.  ie, no tax code = deduct tax 

You would then either wait for HMRC to pay your  refund, probably at the end of that tax year, or claim it yourself.

They shouldn't do that, they should use the emergency code (1257L) on a non cumulative basis.

Which would mean the first £1,048 (of the taxable element) has no tax deducted and, given it's such a small pot, in this instance the remainder will be taxed at 20%.

And as stated will be automatically refunded in due course if no repayment claim is made.

FindMyWayBack

Dazed_and_C0nfused said:

Silvertabby said:

Very unlikely that the Pru would have a tax code to work with, so any payment would be 25% tax free and the rest taxed at 20%.  Telling the Pru that you have no other income won't work, as they have to abide by HMRC rules.  ie, no tax code = deduct tax 

You would then either wait for HMRC to pay your  refund, probably at the end of that tax year, or claim it yourself.

They shouldn't do that, they should use the emergency code (1257L) on a non cumulative basis.

Which would mean the first £1,048 (of the taxable element) has no tax deducted and, given it's such a small pot, in this instance the remainder will be taxed at 20%.

And as stated will be automatically refunded in due course if no repayment claim is made.

Thank you, understood.