If you have taken a trivial commutation from a final salary pension or a small lump sum from any other type of pension it is usually taxed at 20%.
If you have taken a payment under the pension flexibility rules it is slightly different. These payments are usually taxed on 'emergency code' on a monthly basis, where they will:
Note: Tax rates in Scotland and Wales may differ
If the pension provider were to use a weekly payroll scheme, the yearly figures would be divided by 52 and would mean even more tax was deducted; but most are likely to use a monthly calculation.
In most cases in year refunds are possible and all forms can be found on www.gov.uk, search for the form number or via your personal tax account (register via www.gov.uk/personal tax account). Alternatively contact HMRC on 0300 200 3300.
For either type of lump sum, people in Self Assessment generally reclaim/pay overpaid or underpaid tax via their tax return at the end of the year. However, in year claims can be made, but the information must also be provided in the tax return at the end of the tax year.
We also have an easy to follow guide on pensions and taxation.
If you need help to check whether you are due a refund you can call Tax Help on 01308 488066. We also have an easy to follow guide on pensions and taxation.
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