Getting First Pension Payment…taxed or not?

[NorthernBoy]

Hi

I will shortly be stopping work and getting my first pension payment. My payment will be under the monthly tax free allowance of £1047, so there should be no tax to pay. I have let the tax office know that I have stopped paid employment.

However I am wondering what people experience of getting their first payment was? is 20% tax taken off or did they get it tax free (assuming monthly amount lower than £1047). If taxed how long did you have to wait to get the tax back

Many thanks

[RobertT]

I can't really comment on how RM pensions might be taxed as I haven't started drawing mine yet. But I left in June 2023 having worked full time for the first 2 months of the financial year and paid tax via PAYE.

I knew I was due a refund of the tax I'd paid while still at RM and decided to just let that run it's course, rather than actively claiming it. Which was probably a mistake as it took them the best part of a year to pay it back.

I started to drawdown my SIPP about 5 months after leaving and was expecting to be taxed on at least my first monthly payment, but to my surprise I wasn't and haven't been since.

My official income for tax purposes is a tad under the personal tax allowance of £12,570 per year, although that is topped up from savings interest, investment growth and a few premium bond prizes.

[mrcurve]

Defiantly call the tax office, best to call first thing in the morning too, unless things have changed, they can fix things quickly once you speak to them. I think that work pensions are first up for tax. Watch out for tax on interest on any savings, if you get a good lump sum its takes quite a while to flow through, following tax year sort of thing.

[mrcurve]

If anyone is going to be above the threshold, they do take tax from both RMSPS and RMPP.

[RobertT]

Watch out for tax on interest on any savings

It might be worth pointing out that anyone with income of less than £17,570 from wages and pensions, can currently earn more than the normal £1,000 tax free interest in a year from non ISA savings, that's usually allowed for basic 20% tax payers.

And if you have income of less than the personal tax allowance(£12,570), that limit increases to a maximum of £6,000.

https://www.moneysavingexpert.com/savin ... e-savings/

[freespeech]

If anyone is going to be above the threshold, they do take tax from both RMSPS and RMPP.

Depends whether you have "split" your personal allowance in your Gov tax account. It's always good to assign a code to each based on what you expect to earn from each. If you are going to get more than £12570 from one pension then the other will be all taxable.

[freespeech]

If anyone is going to be above the threshold, they do take tax from both RMSPS and RMPP.

Depends how you have aligned your personal allowance in your individual tax account.