Pension tax refund

jcb208

Hi all ,I have just started to draw down my pension taking the 25% tax free and another £12500 which was taxed at emergency rate of 31%.As I have no other taxable income except £800 savings this year I want to claim the tax back.Do I have to wait until after the end of this tax year to fill out the form

Dazed_and_C0nfused

jcb208 said:

Hi all ,I have just started to draw down my pension taking the 25% tax free and another £12500 which was taxed at emergency rate of 31%.As I have no other taxable income except £800 savings this year I want to claim the tax back.Do I have to wait until after the end of this tax year to fill out the form

No.

It doesn't make any material difference but there is no emergency tax rate of 31%.

The emergency tax code is 1257L and first pension withdrawals are usually taxed using that code on a non cumulative basis.

Which means on a payment equal to £150k/year you will have been taxed, above the first £1,048, at a mix of 20%, 40% and 45% 

jcb208

Yes they have used code 1257LM1. the taxable withdrawal was £12000 not £12500 and they have deducted £3788.20.So It is OK to start a refund now

molerat

What are your intentions with this pension for the rest of the year ?

What i the code now allocated to it in your on line tax account ?

Dazed_and_C0nfused

jcb208 said:

Yes they have used code 1257LM1. the taxable withdrawal was £12000 not £12500 and they have deducted £3788.20.So It is OK to start a refund now

Yeah, although going off posts on the pensions board there are delays at the moment .

You could wait for HMRC to issue a new tax code in a few days (probably the emergency code on a cumulative basis) and then take a very small second payment and the pension company will make a significant refund due to how PAYE works.

badmemory

For future reference if you have other pensions you are considering withdrawing money from.  Take a small amount first & wait until you have a tax code sent to you, THEN take out the larger sum.  Unless you take the larger amount in month 12 you will still pay too much tax but not as much too much.

jcb208

I was always self employed and I stopped work 18 months ago .Looking at my online account I have a tax code of 1200LX.I will not be drawing down again until the new tax year. My original plan was to leave my pension untouched but due to the 40% IHT coming in I am spending that first

Albermarle

jcb208 said:

I was always self employed and I stopped work 18 months ago .Looking at my online account I have a tax code of 1200LX.I will not be drawing down again until the new tax year. My original plan was to leave my pension untouched but due to the 40% IHT coming in I am spending that first

You are aware that IHT will only apply to an unused pension pot, if the total of your estate + the pension pot minus your nil rate bands, would be liable for IHT?
I only ask as there is some misunderstanding with some people, who think that the pot will have IHT taken automatically, regardless of their overall position.