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  • FIRST POST
    • Reluctantpensioner
    • By Reluctantpensioner 10th Jan 18, 8:31 AM
    • 32Posts
    • 5Thanks
    Reluctantpensioner
    Drawdown/UFPLS and emergency tax
    • #1
    • 10th Jan 18, 8:31 AM
    Drawdown/UFPLS and emergency tax 10th Jan 18 at 8:31 AM
    A couple of questions concerning the emergency tax that I hear may be applied if you make a taxable drawdown or UFPLS withdrawal. I want to avoid this.

    The assumption is made that any withdrawal is going to be repeated twelve times, overtaxing you. But surely that is only a problem at the beginning of the tax year? If I withdraw in March, can't they get the tax right?

    If I have a valid P45, will they get the tax right then?

    Just joined the forum, love the quality of the information I see.
Page 1
    • Linton
    • By Linton 10th Jan 18, 9:07 AM
    • 9,392 Posts
    • 9,526 Thanks
    Linton
    • #2
    • 10th Jan 18, 9:07 AM
    • #2
    • 10th Jan 18, 9:07 AM
    It is only a major problem for the first ever taxable payment which is done under an emergency tax code as HMRC aren't pre-informed about your new "employment" and so wont have issued a tax code to the pension provider. Taking out the first ever payment in March may well help but I think it is possible that that it could be taxed under "Month 1" whereby the tax calculation is made as if you were taking the money at the start of the year.

    After the first ever payment taking annual drawdowns in March would certainly minimise the chances of grossly excessive tax, but it should be possible anyway to allocate tax codes so there arent any problems.

    One method of getting around the "first ever" problem would be to take a small payment earlier in the year which will be taxed heavily and take out the main drawdown later in the year once the taxcode had been issued.

    Whether a P45 would help I dont know - you would have to ask your pension provider.

    PS if you are taxed excessively HMRC have a form to enable you to retrieve the tax without having to wait until the end of the tax year.
    Last edited by Linton; 10-01-2018 at 9:09 AM.
    • tempus_fugit
    • By tempus_fugit 10th Jan 18, 10:45 AM
    • 421 Posts
    • 390 Thanks
    tempus_fugit
    • #3
    • 10th Jan 18, 10:45 AM
    • #3
    • 10th Jan 18, 10:45 AM
    I've taken two UFPLS this tax year from different pension providers, both totalling less than the annual allowance, and I was taxed on both of them. In the process of claiming the second lot of tax back now.
    Retired at age 56 after having "light bulb moment" due to reading MSE and its forums. Have been converted to the "budget to zero" concept and use YNAB for all monthly budgeting and long term goals.
    • Fermion
    • By Fermion 10th Jan 18, 7:41 PM
    • 83 Posts
    • 32 Thanks
    Fermion
    • #4
    • 10th Jan 18, 7:41 PM
    • #4
    • 10th Jan 18, 7:41 PM
    If you set up a personal tax account with HMRC via the Gov Gateway you can use this to amend your tax code for each pension provider
    see https://www.gov.uk/personal-tax-account/set-up

    Avoids waiting for year end or phoning HMRC
    • NorthernGeezer
    • By NorthernGeezer 10th Jan 18, 8:03 PM
    • 116 Posts
    • 20 Thanks
    NorthernGeezer
    • #5
    • 10th Jan 18, 8:03 PM
    Tax Form
    • #5
    • 10th Jan 18, 8:03 PM
    Anybody have a link to this tax form, its name, or its form number?
    • xylophone
    • By xylophone 10th Jan 18, 8:47 PM
    • 25,544 Posts
    • 15,089 Thanks
    xylophone
    • #6
    • 10th Jan 18, 8:47 PM
    • #6
    • 10th Jan 18, 8:47 PM
    Anybody have a link to this tax form, its name, or its form number?
    https://www.which.co.uk/news/2017/08/hmrc-repays-26m-in-overpaid-pension-tax-how-to-claim-it-back/
    • Linton
    • By Linton 10th Jan 18, 10:07 PM
    • 9,392 Posts
    • 9,526 Thanks
    Linton
    • #7
    • 10th Jan 18, 10:07 PM
    • #7
    • 10th Jan 18, 10:07 PM
    Anybody have a link to this tax form, its name, or its form number?
    Originally posted by NorthernGeezer
    https://www.gov.uk/claim-tax-refund/you-get-a-pension
    • Reluctantpensioner
    • By Reluctantpensioner 17th Apr 18, 4:42 PM
    • 32 Posts
    • 5 Thanks
    Reluctantpensioner
    • #8
    • 17th Apr 18, 4:42 PM
    • #8
    • 17th Apr 18, 4:42 PM
    Update: "If I withdraw in March, can't they get the tax right?"
    No, my 40K UFPLS was taxed at 45% (and zero personal allowance) as if I was about to withdraw 480K before April 5th!!!
    However, the online reclaim process was very fast (10 days).
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