Pension Tax Overpayments

sobrighton

sobrighton said:

Thanks for all the replies, I think I now understand how the PAYE system works. In the future (next tax year) it makes more sense for me to ask my pension provider to stop regular monthly pension drawdowns and just take a lump sum at the beginning of the tax year, then reclaim overpaid tax with a P55. Then the money can go into an instant access savings account. A Self-Assessment tax return should sort out any further tax issues for me (tax on interest etc.).

But of course, I'll lose some investment income from the fund that my pension pot in invested in, I'll need to make a calculation to work out the best strategy given current and future investment returns and predicted interest rates!