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Posted Tue, 12 Sep 2023 13:25:28 GMT by poppy1992
I have a private pension . I took out a small amount and this was taxed at M1 as I expected resulting in no tax being taken. I expected an L code to be sent to the pension provider but the code is LX. The explanation provided on the gateway is “Your tax is based on your pay in each pay period, not the whole year. This stops you paying too much tax in one go. Your payslip or pension statement could show this as W1/M1, or week1/month 1”. However this means if I take a lump sum later in the year below my cumulative personal allowance it will have 20% deducted resulting in me having to fill in a P55 form to get it back. Surely it would be better to give an L code and not take it in the first place? Is there anything that can be done about this?
Posted Thu, 21 Sep 2023 13:48:57 GMT by HMRC Admin 20
Hi poppy1992,

When a lump sum is taken from a pension for the first time an emergency code is always used.
To discuss the code going forward you will need to contact the Income Tax department
Income Tax: general enquiries.

Thank you.

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