Taking out Nest pension

[fadetogrey63]

Hi, now that I've been enrolled on the Royal Mail pension I was looking at taking the cash out from the old Nest pension, it's only 1,450, what I would like to know is would doing this raise my tax code as I believe it would be counted as earnings and the possibility of me going to a higher tax rate.. thanks in advance for any help

[RobertT]

25% would be tax free and the remainder classed as income and taxed accordingly.

How much tax you pay will depend what your overall income is, which includes wages and pensions. These are the bands:

Under £12,570 is tax free.
£12,571-£50,270 is 20% tax.
Over £50,271 is 40% tax.

[fadetogrey63]

25% would be tax free and the remainder classed as income and taxed accordingly.

How much tax you pay will depend what your overall income is, which includes wages and pensions. These are the bands:

Under £12,570 is tax free.
£12,571-£50,270 is 20% tax.
Over £50,271 is 40% tax.

Thanks, in total I earn around 20k a year in wages before tax, so taking the 1,400 shouldn't have a major impact on my future tax payments then,

[RobertT]

No it won't really have any impact.

With the caveat that sometimes tax can be deducted at the incorrect rate initially, due to it being a new and/or a one off amount. Which can result in you paying either too much or too little tax in the short term.

If that does happen, any mistakes are often corrected via a change in your tax code until it evens itself out.