Withdraw lump sum from Pension BR tax code.

Hendog

BikingBud said:

Hendog said:

af1963 said:

If I had done it over 6 years you would have to add the cost of my rent to that as will what would have been 6 x 14,000 = 84,000 what would have made a £20,000 loss

Why would you still be paying rent after buying a house ?  ( that's what the 6 year mortgage payments are for )

sorry didn’t read in properly ( I am Dyslexic and didn’t take it all in properly)
Great way of looking at it. 

The only problem I would have had would have been getting a mortgage for various reasons. 

Do you have other debts or issues that prevented you getting a mortgage? 

What are you not disclosing or were not able to disclose?

I am not sure this is a pension problem now more a debt management issue.

Its not so much about the paying it off it’s more about have the pension company followed the correct procedure when deducting my tax. Or have HMRC not followed the right process by putting me on the wrong tax code. 

If this is the case I might have to pay the Tax back and also interest yet if they are at fault is that fair and especially any interest occurred. 

I can pay a lump sum off it off by cashing in other pensions what really there, for when I am older and retired. 

You would have to read the whole thread to see what I am saying. 

molerat

If a tax code had been allocated in advance then the most likely code that HMRC would have used would have been BR.  The problem here is the massive withdrawal, it was always a tax disaster waiting to happen.

Hendog

molerat said:

As has been said earlier you may possibly get £20 - £100 from the provider as an apology and that will be for not explaining it correctly, nothing to do with the actual tax but they will not be paying that tax.  It is your responsibility to make sure the correct tax is paid, no one else's and if you were not certain how much that would be you should have employed a professional and not asked the provider, that is not in their remit.  BR can be the correct code to use for some pension lump sums and they deducted the correct tax for that code. To be honest HMRC are just fobbing you off, if they had not issued a tax code to the provider they have no idea what tax code should have been used and will be unaware of the precise terms of the withdrawal especially at front line CS level.    You are making an awful lot of stress and work for yourself which will have little to no effect on the outcome.

If you suddenly got a large tax bill due to a technical  fault as told by HMRC and HMRC told you to ask your pension company to investigate it would you not action that to find out why.

can you give me a example off when a BR tax code would be used when withdrawing a large sum from your Pension for the first time. 

Dazed_and_C0nfused

Hendog said:

molerat said:

As has been said earlier you may possibly get £20 - £100 from the provider as an apology and that will be for not explaining it correctly, nothing to do with the actual tax but they will not be paying that tax.  It is your responsibility to make sure the correct tax is paid, no one else's and if you were not certain how much that would be you should have employed a professional and not asked the provider, that is not in their remit.  BR can be the correct code to use for some pension lump sums and they deducted the correct tax for that code. To be honest HMRC are just fobbing you off, if they had not issued a tax code to the provider they have no idea what tax code should have been used and will be unaware of the precise terms of the withdrawal especially at front line CS level.    You are making an awful lot of stress and work for yourself which will have little to no effect on the outcome.

If you suddenly got a large tax bill due to a technical  fault as told by HMRC and HMRC told you to ask your pension company to investigate it would you not action that to find out why.

can you give me a example off when a BR tax code would be used when withdrawing a large sum from your Pension for the first time. 

To some extent it depends on what you mean by large, but where you have provided the pension company with a P45 is one situation when a BR tax code could be used.

Have you read this?

https://www.gov.uk/government/publications/cwg2-further-guide-to-paye-and-national-insurance-contributions/2023-to-2024-employer-further-guide-to-paye-and-national-insurance-contributions

xylophone

According to the OP, the pension company advised him that the month 1 basis would be used.

https://forums.moneysavingexpert.com/discussion/comment/81213720/#Comment_81213720

https://techzone.abrdn.com/public/pensions/emergency-tax-and-pensions-guide#:~:text=Emergency tax code – month 1 basis (M1),-In the majority&text=This doesn't take into,subject to additional rate tax.

It is therefore odd that BR was used.

But if the OP knew that 75% of the withdrawal would be taxed as income, it is difficult to understand how he accepted the Company's assertion that the correct amount of tax had been deducted. At the very least he must have known about tax at 40% even if not the refinements of additional rate and losing personal allowance etc.

Even if the company accept that they made an error in not using Month 1 as described in link, the OP's tax under Month 1  would still have required adjustment and it would have been up to him to sort this out with HMRC.

Dazed_and_C0nfused

xylophone said:

According to the OP, the pension company advised him that the month 1 basis would be used.

https://forums.moneysavingexpert.com/discussion/comment/81213720/#Comment_81213720

https://techzone.abrdn.com/public/pensions/emergency-tax-and-pensions-guide#:~:text=Emergency tax code – month 1 basis (M1),-In the majority&text=This doesn't take into,subject to additional rate tax.

It is therefore odd that BR was used.

But if the OP knew that 75% of the withdrawal would be taxed as income, it is difficult to understand how he accepted the Company's assertion that the correct amount of tax had been deducted. At the very least he must have known about tax at 40% even if not the refinements of additional rate and losing personal allowance etc.

Even if the company accept that they made an error in not using Month 1 as described in link, the OP's tax under Month 1  would still have required adjustment and it would have been up to him to sort this out with HMRC.

That is a totally separate thing to the tax code though.

The tax deduction is calculated using two things, firstly the tax code i.e. 1257L or BR.

Secondly the basis of operation is applied, either cumulative or non-cumulative (often referred to week1/month1 basis).