NHS pension ...Tax ?

ipri

Hi..I will soon receive my NHS pension from" Xafinity paymaster". I understand that they tax this before the monthly cheque is sent.Does anyone know if this is only taxed at basic rate?..or do I have to pay any "higher" tax on ? annual tax retun? thanks ian

CLAPTON

whats your age
whats your income

ipri

I wil be 60 when I retire in 2 weeks...income will be just over higher tax bracket. thanks

CLAPTON

assuming you are male then at 60 you are taxed exactly like you were when working although you pay no NI

so if this pension is your sole income then you will be taxed on whatever the amount is as per normal tax i.e. you will get personal allowance of 6475 then taxed on the next 37,400 at 20% then the rest at 40%

you will need to pay extra tax on any saving interest and dividend

jem16

ipri wrote: »

I wil be 60 when I retire in 2 weeks...income will be just over higher tax bracket. thanks

You will have a normal personal tax allowance of £6475. Income above this will be taxed at 20% until you reach £43,875 when anything above that will be taxed at 40%.

Basically just like your salary.

ipri

Thanks...Yes, but does Xafinity do all this before I get monthly cheque?...if so. do I still need an accountant?? ian

jem16

ipri wrote: »

Thanks...Yes, but does Xafinity do all this before I get monthly cheque?...

Yes it will be handled by PAYE just like your salary.

if so. do I still need an accountant?? ian

That depends on the rest of your affairs. If you only have this pension income plus savings interest/investment dividend payments then probably not. If you have more complex affairs then perhaps.

Why did you need an accountant in the first place?

ipri

classed as self employed in NHS...I will only have monthly cheque plus interest on savings.

jem16

Might be worth employing the acountant for one more year just to tie everything up then.

After that it really shouldn't be necessary. HMRC can adjust your tax code to take into account any extra interest due on savings accounts - you just need to phone them and let them know.

zygurat789

CLAPTON wrote: »

assuming you are male then at 60 you are taxed exactly like you were when working although you pay no NI

Which is how you would be taxed if you were female. Sex discrimination has been removed from the tax system.

zygurat789

ipri wrote: »

classed as self employed in NHS...I will only have monthly cheque plus interest on savings.

If you had a spouce/civil partner who had an income that was not taxed at the higher rate, then, you could transfer the savings to him/her and only pay basic rate instead of higher rate.