Hello and welcome to the site. Thank you for your question.If you have a pension pot of £17,000 and you wish to cash in, then the first 25% would be tax free and the balance of £12,750 would be treated as income and chargeable to income tax.This when added to your salary would make your total income (30,000+12,750) £42,750Personal allowance £10,600, giving you taxable income of (42,750-10,600) £32,150.First £31,785 would be taxed at 20% = £6,357next £365 would be taxed at 40% = £146making your total tax for the year (6,357+146) = £6,503 (monthly equivalent £542).Personally, as only £365 would be taxed at higher rate, I would not unduly worry about it.Emergengy tax code would apply to your monthly salary and the cash in of pension pot would be reported as income on your tax return.
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Thank you for your help......but just to clarify further.......can you tell me what monthly tax I would pay on just the 30,000 so I can see how much difference it will make to my monthly actual income and secondly is it ever possible to pay the tax as a lump sum to the Inland Revenue for the pension tax requirement in the same year so that my monthly (30,000) income remains the same as it currently is?
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I notice you have viewed my latest response to your question about tax implications of cashing in pension pot (JACUSTOMER-51qk6ctl- Last Viewed on 20/04/2015 at 08:22).
Just checking to see if you have any issues relating to your question that I may not have addressed.
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Thank you for your response.
However, I have just read the paperwork for the Pension Cas in and it says the following.....
"where I am taking a lump sum under the rules for uncrystallised funds pension lump sums, I am aware that NFU Mutual will pay 25% tax free and the remainder will be taxed using either my current tax code if supplied, of the emergency tax code on a month one basis. I am also aware that my annual allowance will reduce to £10,000 each year.
I dont understand .......you said before that the tax will not be charged on a month by month basis but will be declared by me at the end of this year and then is repayable in 2017 ......