Paying tax on pension withdrawals

Bandy2023

Hi, all - I currently earn £53824.00 ( Scotland )
In May I withdrew £10k from my pension, actually receiving £7047.00 into my account.
I'd like to withdraw another £10k, it's not ideal but needs must ( so please no comments saying "not a good way to get money" - I know and, as I said, needs must ).
My questions are as follows:

1. Does only receiving £7047.00 back on £10k sound right?
2. Will taking another £10k out result in me moving to another tax bracket? (£53824.00 salary + £20k pension = £ 73824.00 )?
3. I'm usually PAYE, will I have to fill in some sort of tax statement telling them I've 'paid myself' another £20k, or does the fact I've already had tax deducted make this unnecessary?
4. For child benefit tax calculations, do I declare my normal salary or include the pension withdrawals?

lisyloo

1. No it's not right, but the pension company don't know about your other earnings so they can't get it right. What have you decided to do about your tax free lump sum?
2. Yes if you get £73824 income you be in a higher rate tax bracket, but there is a tax free lump sum with pensions and it's not clear what you've decided to do about that.
3. yes you'll need to inform HMRC because your pension company don't know about your earnings and wouldn't be prepared to handle it for you even if they did know.
4. The pension withdrawals count as income so if it's asking for income then yes it needs to be included.

Mark_d

It doesn't sound like you've paid enough tax on you pension withdrawal.  you are in the 40% tax bracket so should have received £6k.

HMRC should know about your pension withdrawals and should adjust your PAYE tax code to recover the extra tax that's due.  For more info try this:
https://www.gov.uk/check-if-you-need-tax-return

FIREDreamer

Mark_d said:

It doesn't sound like you've paid enough tax on you pension withdrawal.  you are in the 40% tax bracket so should have received £6k.

HMRC should know about your pension withdrawals and should adjust your PAYE tax code to recover the extra tax that's due.  For more info try this:
https://www.gov.uk/check-if-you-need-tax-return

Scottish higher rate tax is 42% so should receive £2,500 + £7,500 x 0.58 = £6,850 

Bandy2023

lisyloo said:

1. No it's not right, but the pension company don't know about your other earnings so they can't get it right. What have you decided to do about your tax free lump sum?
2. Yes if you get £73824 income you be in a higher rate tax bracket, but there is a tax free lump sum with pensions and it's not clear what you've decided to do about that.
3. yes you'll need to inform HMRC because your pension company don't know about your earnings and wouldn't be prepared to handle it for you even if they did know.
4. The pension withdrawals count as income so if it's asking for income then yes it needs to be included.

i took the tax free portion a couple of years ago.
Are you sure I'll be in a higher tax bracket, I did clearly state Scotland and here's what the guidance says:

Higher rate	£43,663 to £75,000	42%

Dazed_and_C0nfused

FIREDreamer said:

Mark_d said:

It doesn't sound like you've paid enough tax on you pension withdrawal.  you are in the 40% tax bracket so should have received £6k.

HMRC should know about your pension withdrawals and should adjust your PAYE tax code to recover the extra tax that's due.  For more info try this:
https://www.gov.uk/check-if-you-need-tax-return

Scottish higher rate tax is 42% so should receive £2,500 + £7,500 x 0.58 = £6,850 

I don't think we know if there is a TFLS element yet?

Dazed_and_C0nfused

Bandy2023 said:

lisyloo said:

1. No it's not right, but the pension company don't know about your other earnings so they can't get it right. What have you decided to do about your tax free lump sum?
2. Yes if you get £73824 income you be in a higher rate tax bracket, but there is a tax free lump sum with pensions and it's not clear what you've decided to do about that.
3. yes you'll need to inform HMRC because your pension company don't know about your earnings and wouldn't be prepared to handle it for you even if they did know.
4. The pension withdrawals count as income so if it's asking for income then yes it needs to be included.

i took the tax free portion a couple of years ago.
Are you sure I'll be in a higher tax bracket, I did clearly state Scotland and here's what the guidance says:

Higher rate	£43,663 to £75,000	42%

Plus there could be High Income Child Benefit Charge to pay.

Bandy2023

Dazed_and_C0nfused said:

Bandy2023 said:

lisyloo said:

1. No it's not right, but the pension company don't know about your other earnings so they can't get it right. What have you decided to do about your tax free lump sum?
2. Yes if you get £73824 income you be in a higher rate tax bracket, but there is a tax free lump sum with pensions and it's not clear what you've decided to do about that.
3. yes you'll need to inform HMRC because your pension company don't know about your earnings and wouldn't be prepared to handle it for you even if they did know.
4. The pension withdrawals count as income so if it's asking for income then yes it needs to be included.

i took the tax free portion a couple of years ago.
Are you sure I'll be in a higher tax bracket, I did clearly state Scotland and here's what the guidance says:

Higher rate	£43,663 to £75,000	42%

Plus there could be High Income Child Benefit Charge to pay.

I already pay that, although the last payment was based on my salary alone.
Right now I'm more concerned about tax tax on the pension withdrawals.
By my reckoning, taking another £10k out will NOT push me into the +£75000 tax bracket in Scotland.
If I'm doing a self assessment online, which is something I'm really not used to doing as a PAYE person, what figure do I tell them for income from pensions?
If I tell them £10k, how will they know I've already paid 'some' tax on it?
Should I declare the after tax sum of £ 7047?

MallyGirl

pensions are always stated gross

Bandy2023

MallyGirl said:

pensions are always stated gross

So how do they know I've already paid the majority of the tax on it?
The difference between what I've paid and what I should have paid seems very small, I obviously don't want to get hammered.

MallyGirl

Bandy2023 said:

MallyGirl said:

pensions are always stated gross

So how do they know I've already paid the majority of the tax on it?
The difference between what I've paid and what I should have paid seems very small, I obviously don't want to get hammered.

the pension provider will report to HMRC how much tax they have deducted on how big a withdrawal (using which tax code)