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P45 after getting lump sum in drawdown
Hello
I recently got a lump sum from a retirement investment account. They sent me a P45 with the payment.
I am currently working. do I need to hand this P45 in to my employer?
Comments
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No. Your employer must use the code supplied to them by HMRC - your code in relation to your pension payroll is something entirely different. It's possible that HMRC will adjust the code relating to your employment, but that will be sent directly to your employer. You can keep an eye on such things via your personal tax account:
Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!1 -
Hi JAC209, we have guidance on the taxation of flexible pension drawdown payments, including information on when the P45 may be used to claim a repayment of any excess tax withheld from your pension payment, and the process for making the claim. Please visit this page of our website:
How tax is collected on flexible pension payments | Low Incomes Tax Reform Group
“Official Company Representative
I am an official representative of LITRG (Low Incomes Tax Reform Group) part of the Chartered Institute of Taxation who are an educational charity. We are not part of MSE or HMRC. MSE has given permission for me to post on the Forum but this does NOT imply any form of approval of my organisation or its products by MSE. We can’t give individual advice, but if you require further help, we recommend that you contact a tax adviser, HMRC or one of the tax charities where relevant. You can find more information about where to get help with tax here. If you believe I am posting inappropriately please report it to forumteam@moneysavingexpert.com This does NOT imply any form of approval of my company or its products by MSE"2 -
Don't hand it in, it would only confuse your work payroll. The bit worth knowing is that lump sums like that nearly always come out taxed on an emergency month one basis, so there's a fair chance you've paid more than you actually owe on it. You can either claim it back now or leave it and HMRC will square it up after April, the only real difference is how long you wait for the money.
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