Emergency tax and allowance reduction

Emergency tax and allowance reduction

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I'm trying to produce an emergency tax calculator.  A lot of pension providers have decided that they will need to apply an emergency code (1060 Month 1) on lump sums taken from a pot, where there is no existing code, P45 etc.  That can have a big effect on the immediate sum paid out and force people to apply for a refund or wait until the next year for an automatic repayment.

I’ve got the basic calculator done (Have a look at http://tinyurl.com/ng599lr  but I’m having a real problem getting definitive answers to a couple of questions.  I wondered if someone here might know them?

a)      If the amount goes over £100,000 (or the 1/12th equivalent) does the allowance reduce?

b)      If the amount is below £10,000 (small pot) is it taxed at a fixed 20% rather than annualised?

I’ve had little joy with the HMRC help line or their web pages and I haven’t tracked it down in the technical guide either.

Thanks, Gareth Morgan

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