The new flexible pension rules came into force from 6 April 2015 for those aged 55 or over with money purchase pension schemes.
As announced by the Chancellor in last year’s Budget, these individuals will be able to withdraw as much as they wish from their pension fund but will be taxed on the amount withdrawn at their marginal tax rate. In some cases, the pension fund administrator will apply an emergency PAYE tax code to the payment on a month 1 basis which may result in more tax being deducted than the amount eventually due.
This can either be reclaimed at the end of the tax year or during the year if you complete the appropriate HMRC form. Note that we can advise you of the tax implications of the amounts that you are considering to withdraw from your pension fund and, where necessary, assist you in reclaiming any excess PAYE deducted.