Taxes on pension partial encashment

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Roro999

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Can anyone help.

My annual rate band subject to 20% tax is €25k which has been allocated to employer. Tax on cumulative basis.

I am taking a regular 4% monthly from a 200k pot and 20% tax is being deducted.

If I take an additional encashment next month of 15k will I be taxed at 20% on all of this ? If not will I get a tax refund on doing a balancing statement at year end as I am entitled to earn up to 42k at 20% this year ?
 
Under the cumulative basis, your tax liability is calculated based on your total income from the start of the tax year. If a tax credit or standard rate cut off point (or both) are not used in full in a pay period, the unused amount can be carried forward and used in the next pay period within that tax year.
 
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Where the rest of your rate band allocated to?
Assuming you do have 42k and 25k is assign to pension income and the balance of the rate band elsewhere

Then

then the 15k payment in 1 month from pension source will mean 2083 is at 20%
25000/12 months = 2083.33 per month
Balance of the income 12,916.67 will be at 40% paye
 
cally1990 said:
Where the rest of your rate band allocated to?
Assuming you do have 42k and 25k is assign to pension income and the balance of the rate band elsewhere

Then

then the 15k payment in 1 month from pension source will mean 2083 is at 20%
25000/12 months = 2083.33 per month
Balance of the income 12,916.67 will be at 40% paye
Click to expand...
Thanks. So in your figures a good portion would be subject to 40% tax. But my overall income if I go ahead with 15k drawdown will end up below 43k this year. So when I do my balancing statement for 2024 early next year I should be getting a tax refund for what was hit with 40% tax. Is this correct ?
 
You could make a drawdown to bring your yearly earnings to exactly 43k, if you want to maximise your 20% tax band.

Are you under 66 ?

If in the future your earnings might take you into the 40% tax band, it is a good idea to maximise the amount of 20% taxable drawdowns each year.
 
S class said:
You could make a drawdown to bring your yearly earnings to exactly 43k, if you want the maximise your 20% tax band.

Are you under 66 ?

If in the future your earnings might take you into the 40% tax band, it is a good idea to maximise the amount of 20% taxable drawdowns each year.
Click to expand...
Yes 65
 
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