retirement tax

brovahelpa

Can anyone tell me what tax i should be paying now im retired. I get £8008 state pension plus £2718 occupational pension. I've been given a code of 171P which is the same as when i retired on 1st Nov 09, which i found surprising! Im on the higher personal allowance.

AuntyCat

Your tax code will be the personal allowance (as you say, dependant on age) minus a deduction to collect the correct amount of tax on your state pension. The deduction will be an estimate, usually quite accurate, of the state pension.

Mikeyorks

The tax for the combined pensions is deducted solely from the occupational pension.

£2718 less personal allowances (£1719) = £999 @ 20% = £199.80 pa or £16.70 per month.

You're also entitled to (£9490PA + £2440 10% = £11930 - £10726 income the first £1204 of any savings interest at 10% ....... rather than the 20% that's deducted at source.

trevormax

As there is no system in place to deduct tax from your state pension, HMRC just reduce your personal allowance by the same amount as what you are getting for your state pension. This would account for your reduced tax code.