Small pension pot query

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Vegastare
Vegastare Posts: 998 Forumite
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in Pensions, annuities & retirement planning
I have a one small pot (under £3000 ) and am wondering if I can cash it in, I think that it would be 25% tax free and then 75% tax on remaining.


As over sixty (not yet at state pension - next summer) but have another private pension which brings in under my tax allowance - would the annual allowance I still have left bring down the 75% tax on small pot.


Will phone HMRC but thought it might be easier to get an idea here first.


Wondering if do it in this tax year would be best for me
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  • NoMore
    NoMore Posts: 1,085 Forumite
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    If you have enough overhead remaining in your tax allowance then you won't have to pay income tax on it.
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
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    Vegastare wrote: »
    have another private pension which brings in under my tax allowance - would the annual allowance I still have left bring down the 75% tax on small pot.

    The 75% will be partly untaxed - eventually. But an emergency tax code might be applied to it at first. Many threads here discuss how best to cope with this small vexation.
    Free the dunston one next time too.
  • Vegastare
    Vegastare Posts: 998 Forumite
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    kidmugsy wrote: »
    The 75% will be partly untaxed - eventually. But an emergency tax code might be applied to it at first. Many threads here discuss how best to cope with this small vexation.


    I have been up and down trying to find threads regarding this, never thought about an emergency tax code.....can someone point me in the right direction
  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
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    Emergency tax is irrelevant really, it's the actual tax you might be due to pay which matters.

    The emergency tax code will mean anything over £988 (from the taxable part of the pot) is likely to be taxed when the pension payment is made but this might mean you owe more tax or are due a refund.

    How much of your Personal Allowance remains unused is ultimately what will determine how much tax you actually have to pay on any of this small pot.
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
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    Dazed_and_confused wrote: »
    Emergency tax is irrelevant really

    It's clearly highly relevant to the people who post about it here from time to time. They tend to be quite vexed by it.
    Free the dunston one next time too.
  • Joey_Soap
    Joey_Soap Posts: 410 Forumite
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    Mrs Soap took a small pot lump sum very recently. It was paid 25% tax free, 75% taxed. She filled in the form on line (P55, I think) and about two weeks later got the tax back as a cheque from HMRC. She has no other income in the present tax year. Very simple, very straightforward.
  • Vegastare
    Vegastare Posts: 998 Forumite
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    Joey_Soap wrote: »
    Mrs Soap took a small pot lump sum very recently. It was paid 25% tax free, 75% taxed. She filled in the form on line (P55, I think) and about two weeks later got the tax back as a cheque from HMRC. She has no other income in the present tax year. Very simple, very straightforward.


    Thankyou for this I too do not reach my personnel allowance even with this small pot....but if I leave it I am worried that when I get my state pension, plus the small private pension which I am on at present it will then certainy be taxed. My idea was to take it prior to aviod this.


    Can anyone confirm it is form P55


    I do apperiate everyones help
  • NoMore
    NoMore Posts: 1,085 Forumite
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    Not sure why you need confirmation, its explained perfectly clearly on HMRC website.

    https://www.gov.uk/government/publications/flexibly-accessed-pension-payment-repayment-claim-p55
  • Vegastare
    Vegastare Posts: 998 Forumite
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    NoMore wrote: »
    Not sure why you need confirmation, its explained perfectly clearly on HMRC website.

    https://www.gov.uk/government/publications/flexibly-accessed-pension-payment-repayment-claim-p55


    Thank you No More....for your reply and I can now see how perfectly clearly it is explained on HMRC website, apologies for time wasting
  • badmemory
    badmemory Posts: 7,794 Forumite
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    Please note that if you have any other income in the tax year it is not necessarily that simple.
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