UFPLS P60 Sanity Check

DRS1

https://forums.moneysavingexpert.com/discussion/comment/81948894#Comment_81948894

Yes I thought someone would say that. Of course you are right.

I know there are different attitudes to tax. Some people like doing self assessment. Some people like having PAYE sort out the absolutely correct amount of tax. Some people don't care one way or the other.

The OP was talking about drawing a small amount upfront (to get a code) and then a larger amount later. With some tax codes how much taxable income you take and when in the tax year can impact the tax deducted and the net amount you receive. With others you get a consistent deduction. Some people don't like having too much tax deducted and then having to reclaim it so I thought it was something the OP should consider.

bjorn_toby_wilde

My experience with an AJ Bell pension was that a BR tax code was issued pretty promptly AFTER the first UFPLS. My first UFPLS was a bit larger than I’d originally intended as I left it a bit late in the tax year so a lot of tax was taken on an emergency code.

I claimed another smaller UFPLS a week or so later and by that time the tax code had been received and AJ Bell refunded the excess tax that had been collected from the first payment. An unexpected bonus as I had expected to have to reclaim it from HMRC.

The UFPLS online form was pretty straightforward and the whole process took about 8 days from submission to the money arriving in my account.

Taking a smaller payment first is definitely the more sensible way to do it.

MetaPhysical

Hi all, the way I have it at the moment is that I get the 1257L tax code against my "main" DB pension. I then have a BR tax code against a smaller, second DB pension. I'm happy with this arrangement. My hope is that my first initial small withdrawal from my SIPP of a hundred quid or so in the new tax year will trigger the BR being applied against my SIPP so that my subsequent big withdrawal of four months worth of money (maybe six) will be taxed correctly at 20% because I intend to remain a basic rate tax payer, I told HMRC this last December.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81949209#Comment_81949209

Because the emergency tax code will be used on the first payment from your SIPP you may well find BR code is then applied to the SIPP, but only on a non-cumulative basis.

And your main code will be changed to collect the tax you will owe, spread over the remaining months of the 2026/27 tax year.

Anything you told HMRC last December will be irrelevant as what they are interested in is the actual income payments, as reported by the company running the SIPP.

molerat

You may also need to keep an eye on your tax code. Every year, around October, HMRC decide that I am taking a different large amount from my SIPP which has the knock on effect of reducing my main income coding to deduct the uncollected tax. Luckily I now know it's coming and am able to catch it and correct it before it manages to do any damage 🤡

MetaPhysical

https://forums.moneysavingexpert.com/discussion/comment/81949233#Comment_81949233

https://forums.moneysavingexpert.com/discussion/comment/81949342#Comment_81949342

Thanks for your input.

For these reasons I want to continue to do SA - as I was in employment - so I can correct these HMRC shenanigans.

I can't see why they need to make it so complex from their end? My main DB has the 1257L applied to it so they will coillect tax off that easily. The second DB has BR and so ALL income is subject to 20% as indeed will be the SIPP. Why do they need to be fiddling around with the tax codes and especially the 1257L DB pension one?

Why can't it just be:

DB1 = 1257L

DB2 = BR

SIPP = BR

What's so complex? Clearly I am missing soemthing.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81949591#Comment_81949591

You can have that if you want, without too much trouble.

But HMRC have always tried to avoid a lot of tax (in the context of the situation) from being deducted all in one go.

As soon as the new codes are issued, normally within a few days of your first SIPP payment being reported, just call them and insist that the code for the SIPP is reissued on a cumulative basis.

That will mean all the tax you owe from the first SIPP payment will be deducted from your next SIPP payment and your main code will revert back 1257L.

Keeping everyone happy in this situation is tricky, some people would be horrified if HMRC tried to take back the tax owed all in one go. But you prefer it. But HMRC's computer system doesn't know that.

Providing HMRC with your own estimate of the income you expect to get from each of the three pensions at the same time would also be sensible.