Correct Tax Code

keanooh

Hiya, I recently 'retired' from the public sector at aged 50 and am in receipt of a pension as my only source of income. My monthly payment is taxed using a 'month one' tax code and I am unsure if this is correct. I seem to recall that paying tax on a 'month one' basis was more expensive and whilst my tax code is correct I wonder if I am paying too much tax. Any help would be appreciated, thanks.

dzug1

You need to get the P45 from your employment to the pension payer - that will put your tax code on the correct basis and ensure you pay the right amount.

A month one code is designed to minimise the under/over payment of tax (it can result in either) whilst things are sorted out.

keanooh

When I retired I was advised that my P45 would be sent directly from my employer to the tax office and any change to my code would actioned if necessary. As I retired in March this year I thought that the P45 would have reached the tax office by now, so am unsure if a pension should be taxed on a month one basis. Unfortunately I can't find any details online about tax codes and pensions at aged 50 so I don't know if month one is correct, I have tried to ring my local tax office but always seem to be about number 20,000 in the queue !!

dzug1

If you retired in March then the P45 is no longer valid and won't help as it's now a new tax year

It does mean though that the month 1 basis tax is probably about right.

Maybe ask your pension payer what to do - if this were employment you would be given a P46 to fill in and hand back.

keanooh

My pension payer won't answer any tax queries so I guess it is back to the phone and wait in the queue .......... thanks dzug1 for your help

System

Go to your local HMRC enquiry centre and use one of their priority phone lines or make an appointment with one of their advisors to get your tax code reviewed. Take 2 forms of ID with you in case they can fit you in on the day (1photographic and 1 with name and address).

You can find your local one here - http://www.hmrc.gov.uk/enq/main.htm

Mikeyorks

keanooh wrote: »

Unfortunately I can't find any details online about tax codes and pensions at aged 50 so I don't know if month one is correct

There's nothing really to find. You're in the same position (the Month 1 apart) as you would be if working at age 50.

If you have no underpayment / benefit in kind from a previous year then you should be on Code 647 or very close? Month 1 is not 'correct' ..... but it's a bit academic. As, if you've been on it since the start of the tax year and are getting a uniform rate of pension each month then you're getting your full personal allowance. And the 'Month 1', which is non-cumulative, will be having no effect ....... adverse or otherwise. But still best to get it sorted ....... and I would write rather than queue (telephone or otherwise).

http://www.hmrc.gov.uk/paye/intro/tax-codes.htm#3 (bit about Month 1)

keanooh

I have an appointment with local Tax Office so hopefully things will be clarified, thanks to everyone for their advice / help