HMRC have confirmed that they do not intend to change how they deduct tax on flexible pension drawdowns.

HMRC have reviewed the Real Time Information requirements for reporting flexible drawdowns of employer Pensions and the way in which those drawdowns are taxed.

HMRC have concluded that they will not change the current process:

  • 75% of the payment will be taxed, 25% will be tax-free
  • Tax will be deducted using the Emergency PAYE code on a week 1 month 1 basis.

In a number of cases this will result in tax overpayments and refund requests. HMRC believe this is the most appropriate way of collecting the tax.


Real Time Information index

Pensions: tax rules and planning

Employer pension contributions

Auto-enrolment: workplace pensions (subscriber guide)

What is the 2018/19 PAYE tax code?


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