Too much tax

Hugeass304

I have just taken my first drawdown payment which I knew would be taxed on an emergency code. This has turned out to be 40%. As I am currently a non tax payer I expected it to be taxed at 20%. Will HMRC sort this out themselves after April 5th? Or do I need to contact them and ask for the refund? Or do I just fill in a tax form? Any help appreciated as always 

molerat

You  will have been taxed at 1257LM1 which gives, on top of the 25% tax free if any, £1048.26 tax free, the first £3142 at 20% and the remainder at 40%.  I suspect it is a bit late in the year to claim a rebate now so HMRC will sort it out in the middle of the next year, probably around July time and send you a rebate.

Linton

HMRC will sort out the overpayment on a lump sum after the end of the tax year when your full tax position is known.  Also PAYE will sort out overpayments if you take sufficient further drawdowns in the same tax year.

You can also request a refund using form P55 : https://www.gov.uk/guidance/claim-back-tax-on-a-flexibly-accessed-pension-overpayment-p55.  However since we are already near the end of the tax year it may be better to wait.

Hugeass304

Many thanks,  the sum was 30K of which I received a smidge over 18K. There was no 25% tax free as I'd already taken that when putting it into drawdown. I guess it's best to just wait it out

Qyburn

Hugeass304 said:
I guess it's best to just wait it out

I've seen it said that if you just wait it's going to October or so before you get the refund. When I've filled in the online form, or submitted a tax return, I've received it with three to four weeks.

molerat

Hugeass304 said:

Many thanks,  the sum was 30K of which I received a smidge over 18K. There was no 25% tax free as I'd already taken that when putting it into drawdown. I guess it's best to just wait it out

Then I will change what I posted

You  will have been taxed at 1257LM1 which gives, on top of the 25% tax free if any, £1048.26 tax free, the first £3142 at 20% and the remainder a further £7287 at 40% and the rest at 45%.

FIREDreamer

molerat said:

Hugeass304 said:

Many thanks,  the sum was 30K of which I received a smidge over 18K. There was no 25% tax free as I'd already taken that when putting it into drawdown. I guess it's best to just wait it out

Then I will change what I posted

You  will have been taxed at 1257LM1 which gives, on top of the 25% tax free if any, £1048.26 tax free, the first £3142 at 20% and the remainder a further £7287 at 40% and the rest at 45%.

As there is a 45% tax element shouldn’t this mean there is no tax free element as the personal allowance is fully lost when paying 45% tax (albeit temporarily until HMRC do the correct figures)?

Albermarle

Qyburn said:

Hugeass304 said:
I guess it's best to just wait it out

I've seen it said that if you just wait it's going to October or so before you get the refund. When I've filled in the online form, or submitted a tax return, I've received it with three to four weeks.

The date when the P800 calculations are sent out each year, seems to vary quite a lot . Could be anytime from July to December as far as I can see.

Sarahspangles

Albermarle said:

Qyburn said:

Hugeass304 said:
I guess it's best to just wait it out

I've seen it said that if you just wait it's going to October or so before you get the refund. When I've filled in the online form, or submitted a tax return, I've received it with three to four weeks.

The date when the P800 calculations are sent out each year, seems to vary quite a lot . Could be anytime from July to December as far as I can see.

My OH received his just before Christmas, and mine landed 3 weeks ago!

Qyburn

Sarahspangles said:

My OH received his just before Christmas, and mine landed 3 weeks ago!

For FY 2023/24 or for the current year?

Hugeass304

Thanks all, I think I might fill in the form and claim a refund