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What were your experiences of tax refunds when taking first drawdown

dont_use_vistaprint
Posts: 747 Forumite


My understanding is when you make your very first draw down of potentially taxable / crystallised money (not tax free funds) , the pension provider will deduct 20% tax and you need to claim it back , if it results in you overpaying tax.
I don’t know if anyone else is experiencing the huge delays over the last 12 months with HMRC processing anything I’ve been waiting six months to claim the personal allowance others I know I’ve been waiting 3 to 4 months for much simpler refunds.
could someone please explain the process of claiming this money back and any experiences in the last 12 months? Was it straightforward and fast? Is it possible to claim it back immediately or must you wait until the following April and do it on a tax return?
I don’t know if anyone else is experiencing the huge delays over the last 12 months with HMRC processing anything I’ve been waiting six months to claim the personal allowance others I know I’ve been waiting 3 to 4 months for much simpler refunds.
could someone please explain the process of claiming this money back and any experiences in the last 12 months? Was it straightforward and fast? Is it possible to claim it back immediately or must you wait until the following April and do it on a tax return?
Thank-you
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I ran into the same thing... it is a hassle (unless you are willing to wait and claim it back through your next tax return) and you need to follow up with telephone calls, but you do get the money in the end. And no, it is not fast.
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While it's true that the time to refund has been getting longer.......c.7 weeks in 2024......the process is still relatively simple. For a single UFPLS payment, you simply fill in a form P55 online, and wait for any refund to arrive in your bank account.
That said, it's likely that if your first drawdown is relatively large (eg an annual withdrawal rather than a monthly one), the tax taken may be significantly more than 20%, as it will be calculated on a month 1 basis........but the process of reclaiming the overpaid tax is the same regardless. It's disappointing that HMRC haven't, as yet, introduced a better system for the tax treatment of this type of pension drawdown, but there it is.........0 -
Take a very small amount of (taxable) cash as your first drawdown and then wait until HMRC have issued a tax code to your provider, which means your next drawdown won't be taxed at emergency rate.
Issuing tax codes may not be exactly rapid, but it is usually a lot quicker than paying tax refunds!Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!2 -
dont_use_vistaprint said:My understanding is when you make your very first draw down of potentially taxable / crystallised money (not tax free funds) , the pension provider will deduct 20% tax and you need to claim it back , if it results in you overpaying tax.
I don’t know if anyone else is experiencing the huge delays over the last 12 months with HMRC processing anything I’ve been waiting six months to claim the personal allowance others I know I’ve been waiting 3 to 4 months for much simpler refunds.
could someone please explain the process of claiming this money back and any experiences in the last 12 months? Was it straightforward and fast? Is it possible to claim it back immediately or must you wait until the following April and do it on a tax return?Thank-you
Normally the emergency tax code (1257L) will be operated on the first taxable payment. So the amount of tax will depend on how much that is.
It could consist of any of the following combinations being applied.
No tax
No tax + some 20% tax
No tax + some 20% tax + some 40% tax
No tax + some 20% tax + some 40% tax + some 45% tax
To some degree this is in your hands as you decide what the first taxable payment will be.1 -
I think we should allow for the HMRC to be as knackered as all other public services at this timeA little FIRE lights the cigar2
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My understanding is when you make your very first draw down of potentially taxable / crystallised money (not tax free funds) , the pension provider will deduct 20% tax and you need to claim it back , if it results in you overpaying tax.They use a month 1 tax code. Often referred to as an emergency tax code. Depedning on the amount taken and when it is in the tax year, the amount of tax may be higher or lower than it should be.I don’t know if anyone else is experiencing the huge delays over the last 12 months with HMRC processing anything I’ve been waiting six months to claim the personal allowance others I know I’ve been waiting 3 to 4 months for much simpler refunds.Typically, the electronic method via Government Gateway is 1 month and the paper method is 3 months. In some periods, that extended to 3 months and 6 months respectively.
I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.1 -
Far simpler to be aware of how the system works and take a first dip of under £1048 taxable and any further withdrawals calculating the x/12ths coded allowance. Never had to reclaim tax from my own or MrsM's SIPP.
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molerat said:Far simpler to be aware of how the system works and take a first dip of under £1048 taxable and any further withdrawals calculating the x/12ths coded allowance. Never had to reclaim tax from my own or MrsM's SIPP.0
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Pat38493 said:molerat said:Far simpler to be aware of how the system works and take a first dip of under £1048 taxable and any further withdrawals calculating the x/12ths coded allowance. Never had to reclaim tax from my own or MrsM's SIPP.0
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Dazed_and_C0nfused said:Pat38493 said:molerat said:Far simpler to be aware of how the system works and take a first dip of under £1048 taxable and any further withdrawals calculating the x/12ths coded allowance. Never had to reclaim tax from my own or MrsM's SIPP.0
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