Interactive Investor- Anyone recently drawn down one off income payment?

[BullDog]

Back in January II told me that when you make the first income drawdown payment from a SIPP an emergency tax code would be applied and basic rate tax would be withheld on the drawdown amount. But..... I did the first drawdown this month and II paid the gross amount requested into my bank account with no deduction of income tax. Has anyone else experienced the same thing? Since we're very close to tax year end and II are no doubt very busy indeed I'll not ask them what happened to the tax until after April 6th when things will be a bit quieter there.

Interested to hear other people's recent experience in the meantime. Thanks.

[Dod101]

Back in January II told me that when you make the first income drawdown payment from a SIPP an emergency tax code would be applied and basic rate tax would be withheld on the drawdown amount. But..... I did the first drawdown this month and II paid the gross amount requested into my bank account with no deduction of income tax. Has anyone else experienced the same thing? Since we're very close to tax year end and II are no doubt very busy indeed I'll not ask them what happened to the tax until after April 6th when things will be a bit quieter there.

Interested to hear other people's recent experience in the meantime. Thanks.

I have not done so this year, but I usually take a one off payment in March (from II) once I know my tax position for the year. I have been treated both ways, sometimes via an emergency tax code (I do not have one in the ordinary way) so that I get a net payment, but I think more often have been paid gross. It does not matter; as long as you enter the actual number(s) in your tax return it all comes out in the wash.

Dod

[swill453]

Back in January II told me that when you make the first income drawdown payment from a SIPP an emergency tax code would be applied and basic rate tax would be withheld on the drawdown amount. But..... I did the first drawdown this month and II paid the gross amount requested into my bank account with no deduction of income tax. Has anyone else experienced the same thing? Since we're very close to tax year end and II are no doubt very busy indeed I'll not ask them what happened to the tax until after April 6th when things will be a bit quieter there.

Whether your tax code is emergency or not, if you take drawdown in March and the amount is less than that allowed by the tax code, no tax will be taken off. Assuming you haven't had any other taxable income in the tax year, of course.

This is just how PAYE works.

Scott.

[swill453]

Back in January II told me that when you make the first income drawdown payment from a SIPP an emergency tax code would be applied and basic rate tax would be withheld on the drawdown amount.

BTW this is incorrect anyway, as if your drawdown amount was large enough, higher rate tax would be deducted.

Scott.

[BullDog]

Back in January II told me that when you make the first income drawdown payment from a SIPP an emergency tax code would be applied and basic rate tax would be withheld on the drawdown amount. But..... I did the first drawdown this month and II paid the gross amount requested into my bank account with no deduction of income tax. Has anyone else experienced the same thing? Since we're very close to tax year end and II are no doubt very busy indeed I'll not ask them what happened to the tax until after April 6th when things will be a bit quieter there.

Whether your tax code is emergency or not, if you take drawdown in March and the amount is less than that allowed by the tax code, no tax will be taken off. Assuming you haven't had any other taxable income in the tax year, of course.

This is just how PAYE works.

Scott.

OK, that explains what happened. Thanks.

[MCunliffe1]

Hello All, just registered on here.

I've drawn-down from a Standard Life pension each March for the past five years.

If you draw down in March, as it is the last month of the financial year, the PAYE system does not assume the amount being drawn will be repeated in each tax month following - there are none following.

If you drew-down in, say, November you would like as not be taxed and then each month you'd get a bit of that tax back (assuming you draw down no more) until the amount is repaid commensurate with the tax position and the initial amount drawn-down.

HMRC can be asked to allocate a tax code to your pension provider.

I asked them to assign a code of about 1380 to Standard Life. When I draw down, say, £18k in early March the first 25% is tax-free. So, £13,500 is taxable but with the 1380 code I can 'earn' £13,800 beforfe the PAYE tries to tax me.

I obtained this large code by transferring the £1,250 (125 in code terms) from my wife who does not earn. My code of 1257 plus 125 gave me the 1380 (approx).

Be aware though. As March is the busy draw-down month Standard Life could not guarantee paying me within the current tax year which would have caused no end of problems. Do not leave the draw down until mid-March - you may lose the current years' tax allowance.


I've now moved my pension from S.L. to a Interactive Inv. SIPP and will attempt my first draw-down in March 2024.

[BullDog]

@MCunliffe1 Understood. If it doesn't happen automatically this year, I will be asking HMRC to notify II of a BR tax code. Then in March 2024 and following years II will deduct basic rate tax from my annual drawdown.

[xxd09]

Over many retirement years(23) I have taken different withdrawal amounts each year from my SIPP-very occasionally 2 withdrawals in the same year
20% tax is deducted ( never paid 40% tax on a pension withdrawal) at source by my investment platform-balance paid directly to me
Reclaim overpaid tax from HRMC with R55 form online
That’s it -very simple procedure
Sadly repayment of overpaid tax used to Bev returned to me in 3-4 weeks-now taking months-to be borne in mind if monies needed sooner rather than later
xxd09
PS with Interactive Investor