Tax on Forces Pension & Current Salary

Hi, DH completed 22 yrs service earlier this year and has been employed since then through an agency so monthy take home pay varies. For tax purposes his pension is counted as his main income and his agency pay is taxed at 20%.

Can anyone advise whether it is better to have your pension taxed at 20% and count the new job as main income? I've looked at the figures and think there is a modest difference of approx £300 per annum but when DH called the Tax Office back in April to ask their advice they said there would be no difference?:confused:

Any advice gratefully received.:beer:


  • McKneffMcKneff Forumite
    38.7K Posts
    Part of the Furniture 10,000 Posts Name Dropper
    I cant see why there should be a difference at all,
    Where are you getting the £300 difference from.

    No matter which way you do it, you are still taxed 20% on any earnings over the tax allowance.
    make the most of it, we are only here for the weekend.
    and we will never, ever return.
  • moleratmolerat Forumite
    29.2K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    If the AFP is greater than the tax allowance and other income is variable then it is far easier to have the tax allowance set against the pension. There will be no difference in the final outcome but much easier to cope with. (Been there, done it, got the t shirt ;))
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