Paying income tax when taking money out of drawdown pension

DRS1

trevjl said:

After good advice on here a few months ago, I did exactly what has been suggested in this thread. Took £1K from drawdown from Aviva to trigger a tax code. No tax payable and would trigger a tax code, normally in 30 days I was told. That was about 80 days ago and not heard anything, Intend to take another £5K soon and the balance to £12570 in March. I am guessing this works.
Edit: Just checked online and they have indeed given me a tax code, it was apparently 1222LX and changed on 3rd December to 1237LX, not sure how or why not 1257 ? any ideas welcome 

The code ought to explain it.  There is usually a bit setting out the deductions and a note explaining what they are for.

Maybe it is untaxed interest?

molerat

DRS1 said:

trevjl said:

After good advice on here a few months ago, I did exactly what has been suggested in this thread. Took £1K from drawdown from Aviva to trigger a tax code. No tax payable and would trigger a tax code, normally in 30 days I was told. That was about 80 days ago and not heard anything, Intend to take another £5K soon and the balance to £12570 in March. I am guessing this works.
Edit: Just checked online and they have indeed given me a tax code, it was apparently 1222LX and changed on 3rd December to 1237LX, not sure how or why not 1257 ? any ideas welcome 

The code ought to explain it.  There is usually a bit setting out the deductions and a note explaining what they are for.

Maybe it is untaxed interest?

The fly in the ointment there is the X suffix, a non cumulative code which they often do use, that means only £1031 of any withdrawal will be tax free.  You need to contact HMRC to get it changed to cumulative.  If the reason for the deduction is for untaxed interest you need to up the expected income from that stream to at least £12570 then the full code will be allocated.

Dazed_and_C0nfused

Albermarle said:

molerat said:

trevjl said:

After good advice on here a few months ago, I did exactly what has been suggested in this thread. Took £1K from drawdown from Aviva to trigger a tax code. No tax payable and would trigger a tax code, normally in 30 days I was told. That was about 80 days ago and not heard anything, Intend to take another £5K soon and the balance to £12570 in March. I am guessing this works.

The tax code is usually issued the same day as the first taxable payment is reported to HMRC, have you checked your on line tax account, you don't always get "notified".

It seems that sometimes you do get an e mail notification, and sometimes not. No idea why !

HMRC changed the rules several years ago so that tax codes would stop being issued in certain circumstances.

It didn't change what gets issued to an employer or pension payer though.

https://assets.publishing.service.gov.uk/media/5a7e2bd2e5274a2e8ab464c2/Leg-tiin-paye.pdf

trevjl

DRS1 said:

trevjl said:

After good advice on here a few months ago, I did exactly what has been suggested in this thread. Took £1K from drawdown from Aviva to trigger a tax code. No tax payable and would trigger a tax code, normally in 30 days I was told. That was about 80 days ago and not heard anything, Intend to take another £5K soon and the balance to £12570 in March. I am guessing this works.
Edit: Just checked online and they have indeed given me a tax code, it was apparently 1222LX and changed on 3rd December to 1237LX, not sure how or why not 1257 ? any ideas welcome 

The code ought to explain it.  There is usually a bit setting out the deductions and a note explaining what they are for.

Maybe it is untaxed interest?

Just checked and yes it is about untaxed interest. No idea about the figures, all my cash is in ISA's Whilst we are here, why does it say Annuity. I don't have an annuity.

DRS1

It is just a company name - it does not mean you have an annuity.  Although you would imagine that the company's main purpose was to provide annuities.  

As for the interest figure you can always ask HMRC where they got their numbers but if you read threads on here that can be a time consuming and frustrating exercise.  At various points they use figures estimated based on previous years and then they get reports from banks and building societies and correct the estimates.  If you have moved money from a non ISA account to an ISA account that can explain why they think you should be getting more taxable interest than you are.

molerat

trevjl said:

DRS1 said:

trevjl said:

After good advice on here a few months ago, I did exactly what has been suggested in this thread. Took £1K from drawdown from Aviva to trigger a tax code. No tax payable and would trigger a tax code, normally in 30 days I was told. That was about 80 days ago and not heard anything, Intend to take another £5K soon and the balance to £12570 in March. I am guessing this works.
Edit: Just checked online and they have indeed given me a tax code, it was apparently 1222LX and changed on 3rd December to 1237LX, not sure how or why not 1257 ? any ideas welcome 

The code ought to explain it.  There is usually a bit setting out the deductions and a note explaining what they are for.

Maybe it is untaxed interest?

Just checked and yes it is about untaxed interest. No idea about the figures, all my cash is in ISA's Whilst we are here, why does it say Annuity. I don't have an annuity.

What does it show for estimated income from that source ?  If you are not utilising all of your allowance they will allocate some of the code to estimated interest, if that estimated income is correct then there will still be no tax to pay.  To make the estimated interest deduction go away simply increase the estimated income. 

trevjl

I remembered I do have a few small dividend paying shareholdings outside my SS ISA, None of any savings or dividend income will be anywhere near the limit as I understand it - if I understand it, which I may very well not !!

molerat

Even if the dividend or interest would not be taxed it will still be used in the calculation of the code if other sources would not use that allowance.  You need to adjust that pension income, click on View or update pension details, and speak to HMRC to get the X removed.

trevjl

molerat said:

Even if the dividend or interest would not be taxed it will still be used in the calculation of the code if other sources would not use that allowance.  You need to adjust that pension income, click on View or update pension details, and speak to HMRC to get the X removed.

Sorry for being a bit thick, Tax not my thing at all. So I should change the £1000 to £12570

molerat

................ yes