Timeline for answer to How to reduce UK tax liability after cashing in pension pot by Priyanka Verma

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Jun 25, 2025 at 19:39	comment	added	gnasher729		Don't know what "withholding tax" is, but "emergency tax" is what you pay if HMRC cannot find out the correct amount. For example, you pay a certain amount of tax if you make £100,000 a year. If you make £100,000 a month (because you withdraw your complete pension fund in one month), the percentage of "emergency tax" is set so high that it is guaranteed you don't underpay, assuming that you make £100,000 every month for the whole year. So the highest possible taxrate, paid for £100,000.
Jun 25, 2025 at 14:58	comment	added	Karl Knechtel		Ah, so this "emergency tax" is what Canadians and Amercans call a "withholding tax"?
Jun 25, 2025 at 11:44	comment	added	gnasher729		The point is that they will charge him taxes as if he had made 75% of £300,000 in this year. The emergency tax is not the big deal and mostly a good wakeup call. The problem is paying 40% of all withdrawals that put your income between £52,000 and £100,000 in that year. and 60% if your income is £100,000 to £125,000 in that year. When you only had to pay 20% tax.
Jun 25, 2025 at 11:17	comment	added	Vicky		The point is that by withdrawing it in a more sensible / normal way he could have avoided tax implications entirely, rather than merely having to pay £75k tax instead of £100k tax.
Jun 25, 2025 at 9:43	history	answered	Priyanka Verma	CC BY-SA 4.0