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Understanding Tax on SIPP
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marycanary
Posts: 313 Forumite


in Cutting tax
I recently withdrew £14500 from my SIPP using UFPLS. I received £3,625 as the tax-free element and £7,572.94 as the taxed amount. While I understand how the £3,625 was calculated, I am unsure about the calculation for the £7,572.94.
Could someone please explain the steps involved in this calculation?
Thank you!
0
Comments
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The taxable element was £10875. Tax would have been deducted using the emergency code of 1275LM1. That means, on top of the 25% tax free of £3625, £1048.26 was tax free, the next £3142 was charged at 20% and the remainder at 40%, a total of £3302.06 tax deducted. If you remain a basic rate tax payer the tax should be £2175. HMRC will sort out repaying any excess tax sometime in the next year. Looking at your other posts it seems you were too late to avoid this tax deduction.2
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molerat said:The taxable element was £10875. Tax would have been deducted using the emergency code of 1275LM1. That means, on top of the 25% tax free of £3625, £1048.26 was tax free, the next £3142 was charged at 20% and the remainder at 40%, a total of £3302.06 tax deducted. If you remain a basic rate tax payer the tax should be £2175. HMRC will sort out repaying any excess tax sometime in the next year. Looking at your other posts it seems you were too late to avoid this tax deduction.
Thanks again.0 -
I'm sure I've read on here that if you withdraw it in March, it was a way of ensuring the correct amount of tax was deducted, rather than being over taxed and having to reclaim some of it.
So, now I'm even more confused. Which to be fair, is probably my normal state.1 -
eastcorkram said:I'm sure I've read on here that if you withdraw it in March, it was a way of ensuring the correct amount of tax was deducted, rather than being over taxed and having to reclaim some of it.
So, now I'm even more confused. Which to be fair, is probably my normal state.Any taxable amount over £4189, therefore, would suffer tax at 40%.2 -
marycanary said:molerat said:The taxable element was £10875. Tax would have been deducted using the emergency code of 1275LM1. That means, on top of the 25% tax free of £3625, £1048.26 was tax free, the next £3142 was charged at 20% and the remainder at 40%, a total of £3302.06 tax deducted. If you remain a basic rate tax payer the tax should be £2175. HMRC will sort out repaying any excess tax sometime in the next year. Looking at your other posts it seems you were too late to avoid this tax deduction.
Thanks again.
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molerat said:marycanary said:molerat said:The taxable element was £10875. Tax would have been deducted using the emergency code of 1275LM1. That means, on top of the 25% tax free of £3625, £1048.26 was tax free, the next £3142 was charged at 20% and the remainder at 40%, a total of £3302.06 tax deducted. If you remain a basic rate tax payer the tax should be £2175. HMRC will sort out repaying any excess tax sometime in the next year. Looking at your other posts it seems you were too late to avoid this tax deduction.
Thanks again.0
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