Pension Drawdown - HMRC are an absolute joke

bjorn_toby_wilde

https://forums.moneysavingexpert.com/discussion/comment/82119506#Comment_82119506

I don’t know whether it varies from provider to provider but when I took two UFPLS payments last year AJ Bell had received a tax code by the time the second payment was sent and they refunded the excess tax at that point.

It saved me claiming.

mrklaw

what simple approaches can avoid this (as much as possible, there will always be wrinkles)?

• build a year of income in a cash buffer, live off that for ease of access, then take a lump sum for the next year in March so at the end of the tax year?
• same as above, live off a year’s buffer, one large withdrawal start of the year and allows time for a single reclaim?
• (my likely preferred) - take one years TFC and set the rest up as monthly FAD from April. perhaps have a small buffer just in case but this should sort itself out the fastest?

is the first year after retiring any harder? eg does HMRC assume carry over of payments from previous tax year? should we consider retiring from work a little earlier tactically to allow time for P45 etc to reset things (and self fund for a month or two)?

dunstonh

https://forums.moneysavingexpert.com/discussion/comment/82119621#Comment_82119621

That is how it should be.

How much they refund depends on the amounts involved and the timing of the later payments. The closer you are to month 12 of PAYE, then more likely you will get everything back (and in most cases, a payment in month 12 will see you balance out correctly).

molerat

Work with the PAYE system, don't try to fight it - way less stress in the long run. They ain't gonna change it for a few pensioners.

Marcon

https://forums.moneysavingexpert.com/discussion/comment/82119750#Comment_82119750

Exactly so. OP has done the same thing 5 years running, and not surprisingly has has the same outcome (delay/fume) every time. The PAYE system isn't going to change any time soon, nor are staff numbers at HMRC going to be ramped up - so the best way to improve things is for OP to change their own behaviour in a way which will largely obliterate their problem. Not hard to do so, so why go on upsetting themself year after year when it is entirely within their power to avoid doing so?

Marcon

https://forums.moneysavingexpert.com/discussion/comment/82119623#Comment_82119623

You're over-thinking this and make life needlessly complicated for yourself!

should we consider retiring from work a little earlier tactically to allow time for P45 etc to reset things (and self fund for a month or two)?

No. Just ensure you've grasped how the tax system works and time withdrawals accordingly, allowing for the fact there are built-in delays if you take a large withdrawal early in the tax year.

juliedee4663

https://forums.moneysavingexpert.com/discussion/comment/82119506#Comment_82119506

I don't understand why I would want HMRC to have MY money for months on end for them to make interest on?

juliedee4663

https://forums.moneysavingexpert.com/discussion/comment/82119756#Comment_82119756

Yes I have done the same thing 5 years running but I have never waited more than 6 weeks for the refund.