Early flexible pension withdrawals & the emergency tax headache
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- Опубликовано: 7 ноя 2022
- Being able to flexibly access your pension savings can be an incredibly valuable benefit in these challenging times. But making ad-hoc pension withdrawals will typically result in an overpayment of tax which needs to be reclaimed from HMRC.
This video explains how the emergency tax month 1 rule works and how it’s applied to ad-hoc pension withdrawals.
The Money Purchase Annual Allowance (MPAA) explained: • The MPAA (Money Purcha... The Pension Annual Allowance explained: • The Pension Annual All...
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What can making ad-hoc pension withdrawals typically result in?
Can you just take out tiny amounts for the first 2-3 months?
Doing this would mean that you won't get hit with excessive tax and then waiting forever to claim the tax back.
Also, setting up a monthly drawdown seems better and you could adjust this depending on the market, so adjusting the monthly up in strong months and vice versa (I think there's a name for this but can't remember it).
Yes, that is a strategy you could employ.
Thank you
You're welcome
Hi Justin. Thanks for the info. What documents do I need to claim back the emergency tax? Cheers Denis
You will need your Government Gateway user ID and password. Part 2 and 3 from your P45
I just took early retirement at 55 and plan to start drawing down my SIPP beginning in the new financial year, this April.
Initially I want to take just £16,760k / year, via UFPLS, which will be tax free as I have no other income (£16,760k = £12,570 personal allowance + £4190 which is the 25% tax free). I know about the emergency tax issue, but I understand that initially making a smaller withdrawal, say £1k (via UFPLS) would trigger the emergency tax code without the tax overpayment, and I could then withdraw the remaining £15,760 (again via UFPLS) for the year, tax free. Is this correct? Thanks.
Hi, if i draw down my 25% tax free lump sum at 55 but carry on working, does this limit the amount i can then pay into my pension going forward?
No, you can continue contributing,
taking tax-free cash alone does not trigger MPAA. Make sure you don't fall foul of the recycling rules.
Hi i token full pension out this year which was £7300 the tax i paid from £7300 was about £1600 can i be refunded? This year wich i really need it is for health matter,
Not im ill health retired . Thans for your time.