Why have I been taxed and why is it so much?

Under HM Revenue & Customs (HMRC) rules, pensions are classed as earned income and have to be taxed under Pay As You Earn. All claims have to be taxed in the same way, regardless of your personal circumstances.

Usually, 25% of the amount you take is tax free and the remainder is taxed under the emergency tax code.

You may not have to pay any tax if the amount you take is under the ‘freepay’ personal allowance for the emergency tax code.

If you have a larger fund you may have to pay some tax at higher rate, which is 40%, or the additional rate which is 45%.

We’ll confirm the details of this payment so you can reclaim any overpaid tax from HMRC.

Was this article helpful?

Please score it so we can improve and offer you more

 Members 12 people found this helpful