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UFPLS payment in March - will tax reclaim be required?
He intends to take an UFPLS payment of £40k (of which £30k will be taxable income) from his II SIPP before the end of this tax year which will bring his total taxable income for the year to £49k.
If the UFPLS payment is made in March, will the income tax be calculated correctly with no significant tax reclaim required?
Comments
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Has he already taken taxable amounts from this pension and is there a tax code allocated to it ?If not the the code 1257LX will be used and any excess tax will be refunded some time later next year. The only way to avoid being incorrectly taxed is to take a small UFPLS now and another large one in March.
Never associate with idiots on their own level, because, being an intelligent man, you'll try to deal with them on their level - and on their level they'll beat you every time.
Being hated by idiots is the price you pay for not being one of them.
Jean Cocteau 1889-1963
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If the UFPLS payment is made in March, will the income tax be calculated correctly with no significant tax reclaim required?It depends on the amount and whether it is the first UFPLS or a subsequent one.
I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
He hasn't drawn anything from this pension before.
Would he be better taking 3 x £10k drawdowns in Jan, Feb and March?
His only requirement is to get the money before the end of the tax year preferably without need to wait for any tax refund.0 -
Ignorant question. If he is already getting more than one DB pension won't they already use up his personal allowance in the tax codes issued for them? So isn't there a chance he will be issued with a BR tax code for the DC pension?0
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That's what I assumed would happen.DRS1 said:If he is already getting more than one DB pension won't they already use up his personal allowance in the tax codes issued for them? So isn't there a chance he will be issued with a BR tax code for the DC pension?
Perhaps a better question for me to have asked would be "How can my friend avoid having to make a tax reclaim when taking £30k of taxable income from his SIPP before the end of this tax year".0 -
1257LX will be used on the first draw after which a code will be allocated for further use. It is irrelevant what that code is as long as it is correct for the circumstances, that first draw will likely not have the appropriate tax deducted for the circumstances. If BR is allocated then the second payment can take the whole remainder however much it is.
Never associate with idiots on their own level, because, being an intelligent man, you'll try to deal with them on their level - and on their level they'll beat you every time.
Being hated by idiots is the price you pay for not being one of them.
Jean Cocteau 1889-1963
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