Paying tax on pension withdrawals

molerat

To get £7047 from a £10K taxable withdrawal there must have already been a code allocated to that pension and that code will define how much you will get in the next withdrawal.  Your on line tax account will show that code as may your provider's on line portal.  And, as said elsewhere, it looks like tax will be owed on that first withdrawal at end of year.

Are you also aware that taking that taxable cash limits how much you can pay into a DC pension in future ?

Bandy2023

molerat said:

To get £7047 from a £10K taxable withdrawal there must have already been a code allocated to that pension and that code will define how much you will get in the next withdrawal.  Your on line tax account will show that code as may your provider's on line portal.  And, as said elsewhere, it looks like tax will be owed on that first withdrawal at end of year.

Are you also aware that taking that taxable cash limits how much you can pay into a DC pension in future ?

Would there be a better time to take this second withdrawal?
I'd like it now, but I could postpone it a few months if there's a tax benefit to waiting.
No, I've no clue what you mean about your other part.
The pension I plan to with draw from is 'crystalised' and is from an employer years ago, not my current employer and I'm not making any contributions towards it ( whereas I am to my current employers pension )

Dazed_and_C0nfused

If you taken taxable income from a defined contribution pension then you will be subject to the Money Purchase Annual Allowance (MPAA).

This means you are limited to adding £10,000 per tax year to a defined contribution pension.  It doesn't impact contributions to a defined benefit scheme and also doesn't apply if you took money out by purchasing an annuity.  But that clearly isn't the case here.

The £10,000 includes any basic rate tax relief added by the pension company and any employer contributions to a DC scheme.

https://www.mandg.com/wealth/adviser-services/tech-matters/pensions/annual-allowance/money-purchase-annual-allowance

Bandy2023

Dazed_and_C0nfused said:

If you taken taxable income from a defined contribution pension then you will be subject to the Money Purchase Annual Allowance (MPAA).

This means you are limited to adding £10,000 per tax year to a defined contribution pension.  It doesn't impact contributions to a defined benefit scheme and also doesn't apply if you took money out by purchasing an annuity.  But that clearly isn't the case here.

The £10,000 includes any basic rate tax relief added by the pension company and any employer contributions to a DC scheme.

https://www.mandg.com/wealth/adviser-services/tech-matters/pensions/annual-allowance/money-purchase-annual-allowance

Being limited to adding £10k a year to any other pension isn't a concern.

Bandy2023

So, ignoring all the other deviations into being limited to future contributions etc.

1. I've not quite paid enough tax on the £10k I took out earlier in the year
2. There's nothing stopping me taking another £10k out, taking note of the fact I may be a bit short as above
3. Taking this out won't take me into another tax bracket ( +£75k in Scotland )

??

dunstonh

Would there be a better time to take this second withdrawal?

In payroll month 12 (which is after March 6th.   Month 12 of the payroll cycle is the balancing month.

Bandy2023

dunstonh said:

Would there be a better time to take this second withdrawal?

In payroll month 12 (which is after March 6th.   Month 12 of the payroll cycle is the balancing month.

i can hold on until April, thanks for this helpful info.

molerat

Bandy2023 said:

dunstonh said:

Would there be a better time to take this second withdrawal?

In payroll month 12 (which is after March 6th.   Month 12 of the payroll cycle is the balancing month.

i can hold on until April, thanks for this helpful info.

But that all depends on the tax code, and basis, used on the pension.

Bandy2023

molerat said:

Bandy2023 said:

dunstonh said:

Would there be a better time to take this second withdrawal?

In payroll month 12 (which is after March 6th.   Month 12 of the payroll cycle is the balancing month.

i can hold on until April, thanks for this helpful info.

But that all depends on the tax code, and basis, used on the pension.

For goodness sake....

Qyburn

Bandy2023 said:

3. Taking this out won't take me into another tax bracket ( +£75k in Scotland )

Based on what you're written, no. Your taxable income will be £73,824.00