Tax on pension ad-hoc payments

Hello all, I am currently drawing £723.06 p.m. from my SIPP. Also in receipt of State Pension income at £943.60 p.m. I recently took an ad-hoc sum from my SIPP in July of £27,500 - expecting to be netted down to £22,000 (my required sum). The £27,500 was instead taxed down to £19,738 after having £7,762.17 deducted from this. The regular payment of £723.06 in that month also became taxable and netted to £519 after having £204.09 taxed. Total tax paid in period 4 amounting to £7,966.26 (effective rate of 28% in that pay period). I then took an additional £3,110.33 in August (still period 4) in order to hopefully make up the shortfall to my required £22,000 net lump sum. This income had £1,244 taken in tax - an effective rate of around 40%. My payslips indicate a normal tax code 1257L - no W1/M1 applied. I therefore thought that I would have just received my gross income net of the standard 20%. So £27,500 giving me £22,000. Is HMRC assuming I am to receive the lump sums monthly for the rest of the tax year and this is why they have been hit harder than expected? How do I remedy this asap? I would rather not wait for calculations to be made by tax year end as I am requiring the initial net sum quite urgently, but would rather not keep taking increasingly taxed ad-hoc withdrawals to get there.

Hi,

If you’ve paid too much Income Tax on a flexibly accessed pension payment (that hasn't emptied your pension pot) and don't expect to be taking regular or flexible payments before the end of

the tax year, you can claim an in-year refund by completing a P55 - you can do so here:

Claim back tax on a flexibly accessed pension overpayment (P55)

Thank you.