Making payments under an 'income drawdown' arrangement

Income drawdown is a facility that allows individuals to defer purchase of an annuity from their pension provider, and to receive an income from their pension fund instead.

If you make payments to an individual under an income drawdown arrangement, HM Revenue & Customs (HMRC) will treat them in the same way as standard pension payments. So, when you make the first drawdown payment:

• complete and file a form P46 (Pen) to HMRC - send it online if you have 50 or more employees
• if you know the employee's tax code for the current year, use it when operating PAYE on the payments
• otherwise, use the emergency tax code on a week 1/month 1 basis

File your PAYE in-year forms online: P45, P46, etc

PAYE online filing for employers

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