Pension Withdrawal

Tattie63

I currently have a works pension with Royal London.I have withdrawn my 25% cash some years ago.
I withdraw my maximum from my pension on monthly basis £1150 per month allowing myself and wife £13800 without any tax implications.
My question to you fellow advisors is . If I was to withdraw £30k from this pension pot.
What would be the tax implication.
Any help would be grateful.

Dazed_and_C0nfused

Tattie63 said:

I currently have a works pension with Royal London.I have withdrawn my 25% cash some years ago.
I withdraw my maximum from my pension on monthly basis £1150 per month allowing myself and wife £13800 without any tax implications.
My question to you fellow advisors is . If I was to withdraw £30k from this pension pot.
What would be the tax implication.
Any help would be grateful.

If your only taxable income is going to be £43,800 (and you aren't Scottish resident) then you will end up with tax liability of £6,246 which will be reduced down to £5,994 if you are entitled to the Marriage Allowance tax credit.

So basically you will pay pretty much 20% on the extra £30k.  Assuming that that pension income is your only taxable income.

Tattie63

Thank you for the information.Unfortunately I live in Scotland ?

Dazed_and_C0nfused

Tattie63 said:

Thank you for the information.Unfortunately I live in Scotland ?

Then you would pay a chunk extra as some will be liable to 21% tax, a little at 42% and you would lose the £252 Marriage Allowance tax credit.

You might find a slightly smaller amount is worth considering if it avoids the cliff edge loss of the £252.

https://www.gov.scot/publications/scottish-income-tax-2024-25-factsheet/

Tattie63

Thank you again,the data is helpful.
Yes you are correct take a smaller amount to make it under threshold.
I will reduce down to 28k that will put me in intermediate section at 21% .
My total would be £41800,

Tattie63

Hello,
If I withdraw say £28k Will I pay a higher tax rate initially ? 

Or will it be paid at the rate you quoted 21%?

Dazed_and_C0nfused

Tattie63 said:

Hello,
If I withdraw say £28k Will I pay a higher tax rate initially ? 

Or will it be paid at the rate you quoted 21%?

You would be charged a mix of 0%, 20%, 40% & 45% on a first taxable payment of £28,000.

Tattie63

So so just wait and see,thanks for info.

Tattie63

Received my payment this week of £28k, Tax was deducted £11857 . So you were spot on with the deductions predicted.I have applied to HMRC for a rebate. My regular monthly payment was also deducted at a greater value.Will I receive my rebate near the end of finical year ?
Or will it be returned within 30 days of acknowledgment.
Rate deducted was roughly 42.4 % on the £28k
And my regular payment was 47.6 % .

Dazed_and_C0nfused

Tattie63 said:

Received my payment this week of £28k, Tax was deducted £11857 . So you were spot on with the deductions predicted.I have applied to HMRC for a rebate. My regular monthly payment was also deducted at a greater value.Will I receive my rebate near the end of finical year ?
Or will it be returned within 30 days of acknowledgment.
Rate deducted was roughly 42.4 % on the £28k
And my regular payment was 47.6 % .

Earlier you said this.

I withdraw my maximum from my pension on monthly basis £1150 per month allowing myself and wife £13800 without any tax implications

Are you now saying the tax on your regular pension has gone from nothing to 47.6%??

If so there is clearly more to this than you have previously disclosed and you would need to explain things a bit clearer for anyone to make sense of it.

Tattie63

Yes my monthly payment that I received on the 3rd of every month ,today was taxed at 47.6%.I was paid £599 today.

My withdrawal of £28k that I received on 1st was deducted at roughly 42.4 %.
Prior to this withdrawal I was paid £1152 tax free every month for the last 2yrs.