Tax on one off SIPP payments

[Dod101]

I have not taken any money from my SIPP for some years but used to draw the accumulated income about now (just before the end of the tax year) once I knew my marginal rate of tax for the year.. This year I have just taken the income and to my surprise the amount has been paid gross. I have no tax code as I have no regular pension. I thought they would have taken tax according to some emergency code or at least at the basic rate. What is usual? I am very happy of course and will most likely owe the taxman something come 31 January 2023. I prefer it that way where I owe him money!

Dod

[bluedonkey]

There should be a letter or "payslip" issued by the SIPP provider which would show the PAYE code and the basis for any deduction (or non-deduction).

[BullDog]

There should be a letter or "payslip" issued by the SIPP provider which would show the PAYE code and the basis for any deduction (or non-deduction).

Yes, indeed, my SIPP provider has a BR tax code from HMRC.

[Dod101]

Yes I have no doubt that the 'payslip' should reveal all. I am quite impressed with Interactive Investors though because although they need paper instructions I downloaded the form from the website and posted it only last week. Very happy to be paid gross I must say. It will catch up with me when I do not me self assessment of course.

Dod

[ursaminortaur]

Yes I have no doubt that the 'payslip' should reveal all. I am quite impressed with Interactive Investors though because although they need paper instructions I downloaded the form from the website and posted it only last week. Very happy to be paid gross I must say. It will catch up with me when I do not me self assessment of course.

Dod

Is the total amount that you took less than the standard personal allowance ? If so then without further information on your other income and given that the payment was made so close to the end of the financial year it would seem to me to make sense for them to treat this as a payment fully within your personal allowance amount and thus pay it gross.

[Dod101]

Yes I have no doubt that the 'payslip' should reveal all. I am quite impressed with Interactive Investors though because although they need paper instructions I downloaded the form from the website and posted it only last week. Very happy to be paid gross I must say. It will catch up with me when I do not me self assessment of course.

Dod

Is the total amount that you took less than the standard personal allowance ? If so then without further information on your other income and given that the payment was made so close to the end of the financial year it would seem to me to make sense for them to treat this as a payment fully within your personal allowance amount and thus pay it gross.

The answer is yes it is within the standard personal allowance. You may be correct. I used to do this exercise each year in March and was usually given a tax code but since I have not done so for the last two or three years I no longer have one. I pay very little tax anyway because most of my income is from ISAs so part from self assessment, i have more or less fallen outside of the tax system.

Np matter. As I said it will come out in the wash.

Dod

[mearnsfool]

Go on to your personal tax account. HMRC will allocate your personal allowance to somewhere. It may well be to your SIPP provider. They need somewhere to put the tax code.

From what you are saying, your main " wage" as it were is tax free withdrawals from your ISA. Therefore unless you have say a small job with a company, HMRC who know you have that SIPP have no where else to allocate your personal allowance unless that is you are drawing a state or other pension outwith the SIPP.