Pension withdrawal

[Bipman]

Hi

This is probably a really simple question but I can't get my head round it. I earn £48000 a year and have a tax code of 1257L as you would expect. If I want to withdraw say £40000 from my pension (having already take the 25% tax free lump) then I presume I would lose 40%. The bit I don't understand is will my tax code change i.e. go to 0L ?

Bipman

[someone]

You don't have "a" tax code, you have a tax code per employment (which includes pensions)

So, yes, it's probable that your pension income will get a code similar to 0L. (Note that by default you might also end up with a 1257L code on the pension income - but then you'll have to tell HMRC and pay the tax later anyway - and eventually they'll notice if you don't tell them)

[Bipman]

Aha. Can I not just pay the tax owed immediately?

Bipman

[pawncob]

God bless you Sir. Every little helps.

[Bipman]

Just saves time really.

Bipman

[D&C]

The pension company should use the emergency tax code (1257L) on the first payment and the tax which would be deducted from £40,000 would be £16,378.20.

Which wouldn't be that far off what is due for someone with not much basic rate band left.

You would likely get a (relatively) small refund once the tax year has finished. Automatically without having to fill in any forms.

The above assumes you have no other taxable income not previously disclosed and wouldn't become liable to the High Income Child Benefit Charge.

[Bipman]

Thanks everyone for the help.

Bipman