Tax on pension drawdown lump sums

If a customer receives a regular income payment from their pension, the tax paid during the year should be correct. However if they take a lump sum payment there will often be overpaid tax, because ad hoc income is treated in line with the most recent HMRC requirements, which means payments are subject to 1/12 of the personal allowance. 

This factsheet explains how tax is deducted for pension drawdown lump sums, and how you and your clients can reclaim any overpaid tax if needed.