Excess AVCs

[arsenalbob]

Hi all
I received my NRA65 benefits back in March. They still owe me £7200 in excess AVCs. This is due to be paid at the end of this month. Will this be taxed or part taxed? I’ve heard so many differing stories
Thank you

[RobertT]

If it's excess AVC's, you've presumably had the full tax free amount already?
If so, the excess amount will count as income and taxed under normal PAYE rules.

In simple terms, the first £12,570 you earn in the current financial year is tax free, with everything after that being subject to income tax.

In practice you will probably pay tax on the excess initially but you maybe entitled to a refund depending on what other income you have.

[arsenalbob]

Thanks for the reply. I’ve been told similar in work except 25% of it is tax free. It would make a difference of around £350 if true

[RobertT]

I know that any excess DBCBS cash is paid out as an Uncrystallised Pension Lump Sum(UFPLS), where the first 25% is also tax free. But to be honest I'm not 100% sure if that also applies to excess AVC's.

Nice little bonus if it is!

[arsenalbob]

Thanks. Will let you know soon

[arsenalbob]

Yes the same tax rules apply to excess AVCs. 25% are tax free

[RobertT]

Yes the same tax rules apply to excess AVCs. 25% are tax free

Result.