HMRC & UFPLS

sgx2000

Hi Everyone 
A while since I last posted (although still watching/learning)

I have now been retired 1 year - woohoo
65 years old been living off DB Pension and Voluntary redundancy (last financial year)
DB is £8036 gross

I will, within the next couple of months be with drawing my 1st UFPLS payment from Aviva
of £6044 
Aimed at using my whole £12750 tax allowance this year

My question is...
By taking a single £6044 UFPLS payment will HMRC screw this up
I.e. Assume I will be taking this every month....???

Or have they finally got their act together?

molerat

HMRC will not "screw it up", it will be taxed according to the PAYE regulations the same as any other job. If you have not taken a payment from this pension before the 75% taxable will be taxed at 1257M1 with £1048.26 tax free and the remainder taxed accordingly including some at 40%.  HMRC do not have crystal balls and cannot predict a correct code to issue against something they know nothing about before it happens.  The only way to avoid being overtaxed is to take a small first dip of under £1048 taxable and take the rest according to the appropriate 1/12ths of the annual coded allowance then issued with (probably) a final dip in March

Hoenir

sgx2000 said:

By taking a single £6044 UFPLS payment will HMRC screw this up

If you don't wish to be impacted by standard PAYE proceedure. Draw the money out equally over the remaining months over the tax year. This is no different to how you've taxed all your working life!

dunstonh

By taking a single £6044 UFPLS payment will HMRC screw this up

How could HMRC screw that transaction up?

I.e. Assume I will be taking this every month....???

ahh, so its not HMRC screwing it up that worries you but HMRC doing it correctly that does.

Or have they finally got their act together?

PAYE was introduced in 1944 and works very efficiently.  The issue was never HMRC.  Just a lack of understanding how PAYE worked.  HMRC have improved the method to reclaim online and the speed at which they are refunding (3 weeks now for the online method)

sgx2000

Wow harsh replies.....

But Interesting....

Probably my issue is with Aviva
No online simple UFPLS withdrawl request page...

They insist that you phone for each withdrawl

sgx2000

My 'screw it up'  comment was because if I withdraw £6K as a one off payment (!/4 of the way though the financial year they instantly change my tax code to assume I will be taking £6k every month for the remainder of the financial year.... or am I completely wrong?

ali_bear

Sounds like you may be in an older scheme with Aviva. If so you could ask them to transfer/convert it into their SIPP that would give you more flexible access to your funds. 

sgx2000

Thanks ali_bear

I was going to look at changing it to a sipp anyway so could be  a double win....

snarffie

Is it practical to take UFPLS withdrawals every month (I'm with interactive investor)?  I know there is the drawdown option too, but just wondered if monthly withdrawals are a possibility with UFPLS/ii?

artyboy

sgx2000 said:

My 'screw it up'  comment was because if I withdraw £6K as a one off payment (!/4 of the way though the financial year they instantly change my tax code to assume I will be taking £6k every month for the remainder of the financial year.... or am I completely wrong?

 But that's not 'screwing it up', as has already been pointed out to you - that's just how the system works, and realistically there is no other way it could operate...  so whilst I take your point about 'harsh' replies, they were only intended to rebut your incorrect and rather emotive language!

Albermarle

snarffie said:

Is it practical to take UFPLS withdrawals every month (I'm with interactive investor)?  I know there is the drawdown option too, but just wondered if monthly withdrawals are a possibility with UFPLS/ii?

Normally with the retail pension providers ( those who deal direct with the public) it is not possible or is a big hassle.
A common method is to take the tax free cash annually ( put it in a savings account) and then the taxable part monthly.
This is not UFPLS but flexi access drawdown , but brings pretty much the same result.