Income tax and OAP pensions

freddi_2

I will be 65 in October 2011 and today I got a letter from HM Tax wanting details of my private pensions and what my OAP pension forcast will be so that they can work out what my tax code should be.

Is this normal, as I would have thought that they are more than a year early?

Does this mean that from April of the next tax year, 2011/2012, my tax allowance will be £9490?

I thought that it would not change until my 65th birthday in October 2011.

jem16

freddi wrote: »

Does this mean that from April of the next tax year, 2011/2012, my tax allowance will be £9490?

Yes providing your total allowance is less than £22,900

I thought that it would not change until my 65th birthday in October 2011.

You are entitled to the higher allowance for the whole of the tax year in which you turn 65.

freddi_2

You are entitled to the higher allowance for the whole of the tax year in which you turn 65

So they will need from now until then to work it all out.

I had better get a pension forcast and get the form filled out as soon as possible then.

jem16

freddi wrote: »

So they will need from now until then to work it all out.

HMRC wheels don't turn quickly. I'm actually quite impressed you are being asked so early.

freddi_2

HMRC wheels don't turn quickly.

That is why I asked, I thought it was a bit early.

Goldenyears

Even if you get this advance notice I would still post HMRC a letter detailing the confirmed final award amount and start date. You get the DWP final award notice about 12 weeks before your start date. Maybe the new systems are supposed to link up seamlessly, but no harm in sending a letter.

Loughton_Monkey

Keep a track of all this, Freddi.

Because you will be receiving income from at least two sources, all your tax codes need to be 'co-ordinated'. Your state pension will almost certainly be paid tax free, and then a numeric code might also apply to one of your private pension payers, who will take tax above a certain amount. Another of your private pension payers may be given a tax code of "BR" which means tax the lot at Basic Rate.

But it is this scenario that has led to the huge problem with 5 million over/under payers that the tax office have caused [sorry, I mean that the tax office hasn't caused!].

So whatever happens, make sure you understand what they finally come up with, and check it. Every year.

Good luck.

whiskyman

Loughton_Monkey wrote: »

Keep a track of all this, Freddi.

Because you will be receiving income from at least two sources, all your tax codes need to be 'co-ordinated'. Your state pension will almost certainly be paid tax free, and then a numeric code might also apply to one of your private pension payers, who will take tax above a certain amount. Another of your private pension payers may be given a tax code of "BR" which means tax the lot at Basic Rate.

But it is this scenario that has led to the huge problem with 5 million over/under payers that the tax office have caused [sorry, I mean that the tax office hasn't caused!].

So whatever happens, make sure you understand what they finally come up with, and check it. Every year.

Good luck.

The State Pension will certainly be paid without deduction of tax. There is never a deduction from the state pension for income tax. It is not tax free though. It is a taxable income and must be reported as such.

iolanthe07

I suspect they've got it wrong and that they think you're 65 this October. I'm 65 next March and my tax office said that I wouldn't hear anything about my state pension until three months before or less. I am entitled to the higher allowance this year but was refused it because I earn too much. Apparently, if you earn over a certain amount, they reduce the allowance pound for pound.