Pension Drawdown Tax Refund

Misteeq

Hi,

My partner is taking 100% of a small pension fund and understands he will be taxed at 40% on 75% of the fund.

If he is entitled to any tax refund, will he have to wait until April 2026 to claim this back or can he try and claim this back from HMRC earlier?

He earns £25,396.00 per year.

Many thanks.

molerat

If he has not drawn from this pension previously he will likely be taxed at 1257LX on the 75%, he will not be taxed at 40% on the whole 75%.  He can reclaim any excess tax in year. https://www.gov.uk/claim-tax-refund

Dazed_and_C0nfused

Misteeq said:

Hi,

My partner is taking 100% of a small pension fund and understands he will be taxed at 40% on 75% of the fund.

If he is entitled to any tax refund, will he have to wait until April 2026 to claim this back or can he try and claim this back from HMRC earlier?

He earns £25,396.00 per year.

Many thanks.

Why does he think that?

Misteeq

molerat said:

If he has not drawn from this pension previously he will likely be taxed at 1257LX on the 75%, he will not be taxed at 40% on the whole 75%.  He can reclaim any excess tax in year. https://www.gov.uk/claim-tax-refund

Thank you for your reply. 

He took 25% tax free allowance last year. 

Does he have to wait until April 2026 to claim any tax refund he may be due?

Many thanks

Misteeq

Dazed_and_C0nfused said:

Misteeq said:

Hi,

My partner is taking 100% of a small pension fund and understands he will be taxed at 40% on 75% of the fund.

If he is entitled to any tax refund, will he have to wait until April 2026 to claim this back or can he try and claim this back from HMRC earlier?

He earns £25,396.00 per year.

Many thanks.

Why does he think that?

Dazed_and_C0nfused said:

Misteeq said:

Hi,

My partner is taking 100% of a small pension fund and understands he will be taxed at 40% on 75% of the fund.

If he is entitled to any tax refund, will he have to wait until April 2026 to claim this back or can he try and claim this back from HMRC earlier?

He earns £25,396.00 per year.

Many thanks.

Why does he think that?

Just from what he has read on line.

DRS1

Misteeq said:

molerat said:

If he has not drawn from this pension previously he will likely be taxed at 1257LX on the 75%, he will not be taxed at 40% on the whole 75%.  He can reclaim any excess tax in year. https://www.gov.uk/claim-tax-refund

Thank you for your reply. 

He took 25% tax free allowance last year. 

Does he have to wait until April 2026 to claim any tax refund he may be due?

Many thanks

So he took 25% of the fund as tax free cash last year and this year he is taking 100% of what was left of the fund?  If that is right he will be taxed on 100% of what he takes this year (not just 75% of it).  So if he had a pension fund of £20k and took £5k tax free in 2024/5 leaving £15k, when he takes that £15k in 2025/6 all £15k is taxable.  He can't say that £3750 is tax free and only the rest is taxable.

He won't have to wait until April 2026.  Have a look at this to see which form he might want to use
Are you owed a pension tax refund? - Which?

Misteeq

DRS1 said:

Misteeq said:

molerat said:

If he has not drawn from this pension previously he will likely be taxed at 1257LX on the 75%, he will not be taxed at 40% on the whole 75%.  He can reclaim any excess tax in year. https://www.gov.uk/claim-tax-refund

Thank you for your reply. 

He took 25% tax free allowance last year. 

Does he have to wait until April 2026 to claim any tax refund he may be due?

Many thanks

So he took 25% of the fund as tax free cash last year and this year he is taking 100% of what was left of the fund?  If that is right he will be taxed on 100% of what he takes this year (not just 75% of it).  So if he had a pension fund of £20k and took £5k tax free in 2024/5 leaving £15k, when he takes that £15k in 2025/6 all £15k is taxable.  He can't say that £3750 is tax free and only the rest is taxable.

He won't have to wait until April 2026.  Have a look at this to see which form he might want to use
Are you owed a pension tax refund? - Which?

Thanks very much!

Hoenir

Misteeq said:

If he is entitled to any tax refund, will he have to wait until April 2026 to claim this back or can he try and claim this back from HMRC earlier?

Is it neccesary to withdraw all the money in one lump sum? 

Albermarle

Hopefully he has other plans in place to fund his retirement ?