pension tax
mandiskem
Posts: 112 Forumite
my partner of 19 years paid into a works pension for 2 years bk in 1997 and left in 99 hes 59 now he hasnt worked since 2011 due to having strokes copd diabetes and short term memory loss he wont have a tax code so his letter from the pension company has said the tax will be taken from br code my question is if he hasnt been working how can they take tax off him
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If his total income, from pensions and anything else, will be higher than his personal allowance, he will have to pay income tax.
Tax at the appropriate rate is automatically withheld by pension providers. If he should not pay tax, he can do one of two things, or both:- get a tax code and make sure his pension provider has got that code
- call the HMRC at the end of the tax year to get any overpaid tax returned
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my partner of 19 years paid into a works pension for 2 years bk in 1997 and left in 99 hes 59 now he hasnt worked since 2011 due to having strokes copd diabetes and short term memory loss he wont have a tax code so his letter from the pension company has said the tax will be taken from br code my question is if he hasnt been working how can they take tax off him
We are only just over 3 months into the tax year, so have 9 months to go, in which he will have the pension income.
The emergency code is the full allowance so he won't lose out unless he has some reason to have deductions (eg uniform allowance, money owed from previous year).
They will have looked at his expected income for the 2017-18 tax year and deduct so that the required amount is paid by the end of the year. There maybe some tax free months or no tax at all, depending on the actual income.0 -
I'd its only 2 years of pension how much money is it?
If he has health problems then an enhanced annuity may be possible, you don't normally have to take what your provider immediately offers and there may be better opportunities he can transfer to, depending on whether this is a final salary or defined contribution pension.0 -
I'd its only 2 years of pension how much money is it?
If he has health problems then an enhanced annuity may be possible, you don't normally have to take what your provider immediately offers and there may be better opportunities he can transfer to, depending on whether this is a final salary or defined contribution pension.
it turns out to be £21,0160 -
he dont get any income apart from pip disability benefit which isnt taxed onWe are only just over 3 months into the tax year, so have 9 months to go, in which he will have the pension income.
The emergency code is the full allowance so he won't lose out unless he has some reason to have deductions (eg uniform allowance, money owed from previous year).
They will have looked at his expected income for the 2017-18 tax year and deduct so that the required amount is paid by the end of the year. There maybe some tax free months or no tax at all, depending on the actual income.0 -
my partner of 19 years paid into a works pension for 2 years bk in 1997 and left in 99 hes 59 now he hasnt worked since 2011 due to having strokes copd diabetes and short term memory loss he wont have a tax code so his letter from the pension company has said the tax will be taken from br code my question is if he hasnt been working how can they take tax off him
Even if what the pension company is doing is correct, which is debatable, any tax overpaid can always be claimed back.0 -
Pensions are taxed under PAYE just like wages. The way this works is that once HMRC are notified that someone has been paid some "wages" they will issue a tax code to the "employer". So for the first ever payment the pension company has no tax code and must use BR on a month 1 basis which will normally lead to an overpayment of tax. Once the correct tax code has been received any excess tax paid will be automatically refunded in the next payment.
This works fine unless there is only ever one payment in the tax year ,e.g if you take the whole of your pension as a lump sum or if your first ever payment is in March. The over payment will be resolved by the tax year end calculations or you can inform HMRC by use of an appropriate form.0 -
That is wrong. There is no need whatsoever for BR code to be used, it should be the emergency code on a week1/month1 basis if the guidance on gov.uk is followed (booklet CWG2).
For smaller amounts, like op's partner is likely to get, this will mean no tax is deducted.
2.2.4 Procedures for other pension and annuity payers
All pensions and annuities from, or in respect of, a registered pension scheme are PAYE pension income.
Pension recipient doesn’t give you form P45
set up a new payroll record for them
include the date the pension started with the first pension payment
indicate ‘Yes’ in the occupational pension indicator field on the first and every payment of pension
include the annual amount of the occupational pension with the first pension payment, don’t pro rata it from the start date
include the tax code - unless you’re told to use a new tax code by HMRC, use the emergency tax code on a week 1/month 1 basis
include the Payroll ID, if you want to use one0 -
How is this pension being taken? PCLS and monthly income?
Trivial commutation?0
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