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?