Partial Drawdowns, and Emergency Tax

[yopyop]

Hi all,
I searched the forum and got some clear answers for each part, but I want to put them together and see if my understanding is correct (probably not)

Let's take an example of a SIPP valued at 64K for simplicity of numbers/calculations below - with Youinvest (not that it matters I guess)

Scenario 1
If I put it into drawdown and then ask for just £16.000, but take the 25% 4K immediately, I assume I won't pay any tax (TFLS) even under the emergency tax code. (correct?)

If ask for 5K in month 1, the only part considered as taxable is the 1K?

And since the 1,000 pounds from the taxable drawdown, under emergency tax rules it's below the personal allowance threshold of 12570/12 = 1.047, so I pay no tax/no emergency tax.

The other 11K stays in my SIPP in month 1

If in month 2 to 12 I ask to withdraw 1K each time, I will withdraw 16k in Year 1 with no emergency tax paid.

Is this correct?



Scenario 2

Let's say I do the same - request 16k drawdown and only take the 4K TFLS in month 1

Can I then ask for another partial drawdown in month 4 of 16K and take the second TFLS.

Same in month 7 and month 10, so I end up requesting 4 drawdowns, taking just the 4x4K tax free lump sums and not be affected by an emergency tax code???

In both cases, Year 2 has the remaining 48K - the first scenario still has a TFLS of 12K - the second has only taxable income

Am I way off in my interpreation of both scenarios???


Thanks
Carl

[fisher]

Your scenarios look correct to me.

[yopyop]

Great Thanks!!

[swill453]

Don't be afraid of emergency tax codes. If you're over-taxed you can fill in an online P55 form and reclaim it, within the same tax year.

I tend to take out the full personal allowance (£12,570 this year) in one lump at any convenient point when I have the cash available in my SIPP, then immediately reclaim any tax.

Scott.

[martinc]

If you take £16000 you will get £4000 tax-free and you will pay emergency tax on £12000 even thought it's below the personal allowance. As mentioned above it's easy to reclaim via an online P55 but it's taking longer than normal this year.

If you drawdown £16000 4 times but leave the taxable part in drawdown you will get 4x£4000 tax free and have 4x£12000 in drawdown, there is no tax to reclaim.