Taxing a pension twice

BarbaraLouise

I am fully employed and also over the age of 60 therefore I receive my OA pension. I also receive another small pension of £21 per month. For the past 2½ years this pension together with my OA pension has been taken from my personal allowance to recoup the tax via PAYE. No problem there. Suddenly I have now been told that this small pension is to be taxed separately and of the £21, £17 went in tax! However this pension is still being taxed through PAYE on my salary. I phoned the tax office and a rather unhelpful soul told me that 'there have been changes' but couldn't explain what they were. I have written to the PAYE tax office and the pension tax office but I can't find out why this situation has changed. Does anybody know?:mad:

fengirl_2

It sounds as if your OAP is now in your PAYE code for your job and your pension is being taxed at basic rate and this has been backdated to 6 April, hence the large deduction.
You must have had notices of coding for each source. Does the new code for your pension say code BR (NOT week 1)?

trevormax

The changes you were told about are that until recently, HMRC would sometimes set a no tax code (code NT) on the occupational pension, and then code the amount in your tax code. The new procedures are to set up a second tax record for the pension and tax it BR instead of coding it into your personal allowance.

So before the change, you would have had your jobs tax code reduced by £252 (£21 x 12)

What Fengirl said sounds about right. BR on £21/month for 4 months is £16.80. You will get this back in your job because the £252 previously coded to cover the pension will be added back on.

Next month (and every month following), you should pay about £4.20 tax on the occupational pension.