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Paying tax on SIPP
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mrichard69
Posts: 13 Forumite


I have a 1257L tax code and no income other than my SIPP. so far this tax year I have withdrawn £1000, which was not taxed, and £4000 the following month that was taxed. Please can someone clarify how this works? I have only used £5000 of a £12570 tax free allowance for the year
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Comments
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PAYE takes what you've earned to date, and allocates tax on the assumptino that you'll keep earning at the same rate.
£1000 in month 1 would be extrapolated as being the first of twelve monthly withdrawals of £1000, which would add up to £12000 and be still below your annual tax allowance.
£5000 across months 1 and 2 would be extrapolated as the first two months from twelve, with an average monthly withdrawal of £2500. This would add up to £30000 over a year which is above your tax allowance, so some tax would be taken.
If you take no more income this tax year, or less than about £7.5k, you'll be due a refund of all the tax paid. If you take more than £12.5k in total but less than £30k, you'll probably be due a partial refund, depending how much was actually taken.0 -
mrichard69 said:I have a 1257L tax code and no income other than my SIPP. so far this tax year I have withdrawn £1000, which was not taxed, and £4000 the following month that was taxed. Please can someone clarify how this works? I have only used £5000 of a £12570 tax free allowance for the year
Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!0 -
af1963 said:PAYE takes what you've earned to date, and allocates tax on the assumptino that you'll keep earning at the same rate.
£1000 in month 1 would be extrapolated as being the first of twelve monthly withdrawals of £1000, which would add up to £12000 and be still below your annual tax allowance.
£5000 across months 1 and 2 would be extrapolated as the first two months from twelve, with an average monthly withdrawal of £2500. This would add up to £30000 over a year which is above your tax allowance, so some tax would be taken.
If you take no more income this tax year, or less than about £7.5k, you'll be due a refund of all the tax paid. If you take more than £12.5k in total but less than £30k, you'll probably be due a partial refund, depending how much was actually taken.0
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