State pensioners born before 1959 urged to withdraw £1 or face letter from hmrc

A £1 PENSION TRICK COULD STOP YOU FROM LOSING THOUSANDS IN EMERGENCY TAX WHEN WITHDRAWING FROM YOUR PENSION, ACCORDING TO PERSONAL FINANCE EXPERTS. 05:58, 04 Jun 2025 State pensioners are

being urged to spend £1 or face a letter from HMRC. A £1 pension trick could stop you from losing thousands in emergency tax when withdrawing from your pension, according to personal finance

experts. State pensioners, who have to be 66 and thus born before 1959, are at risk of overpaying tax when they take out lump sums from their pensions. In January, February and March this

year, pensioners claimed back as much as £44 million in overpaid tax, according to HMRC, worth £3k per person. ‌By withdrawing a small amount first – as little as £1 in some cases – HMRC is

prompted to issue an up-to-date tax code for those impacted, ensuring they have the correct code and won't be overcharged. READ MORE ALL THE PARTS OF ENGLAND SET FOR 'AT LEAST

30C' NEXT WEEK IN UK HEATWAVE Martin Lewis said: “The big thing to understand when it comes to taking money out of your pension when you’ve got a pot of money built up, a lot of what’s

worth thinking about is tax. Article continues below “You generally get 25 per cent of the money in your pension tax free, and the rest is taxed. But what counts and when it’s taxed is when

it gets complicated.” He said: “But if you do what’s called a draw-down or annuity then you can just take the jam, you can take 25 percent of your pension totally tax free and you’re paid

the rest via the draw-down or annuity later when you take it. “This allows you to control when you pay the tax on your pension pot. If later on in life you become a non-taxpayer, you take

the rest out when you’re a non-taxpayer, you get a 25 percent lump sum now, and then when you take the rest of the money out even though it’s taxable, because you’re a non-taxpayer, it would

be better for you.” Article continues below Tom Selby, director of public policy at AJ Bell, said: “We have only just blown out the candles on the cake celebrating 10 years of pensions

freedoms. "It is simply unacceptable that, after all this time, the Labour Party Government has still not managed to adapt the tax system to cope with the fact Britons are able to

access their pensions flexibly from age 55, instead persisting with an arcane approach which hits people with an unfair tax bill, often running into thousands of pounds, and requires them to

fill in one of three forms if they want to get their money back within 30 days.”