Pension tax in year of retirement

jem16

Domain.Rider wrote: »

OK, I'm going to dig out all the paperwork and double-check my income figures - I may have missed something, what with holiday pay-in-lieu, share options, uncle Tom Cobley and all...

Good idea.

So (I think) I'm reasonably clear that, if my total income for the year, before tax and after the personal allowance, is over the higher rate threshold, then the D0 coding on the 2nd pension is correct, and I won't be due any rebate,

Not necessarily. It would only be correct if your total income was over £43,875 by the amount that you expect to receive from your AVC pension - i.e. £6400 ( £9600/12 x 8). If it's not you will pay too much tax at 40%.

But come April 2011, the D0 coding on the 2nd pension should revert to BR, because income for next tax year will be well below the higher threshold <phew!>

Yes it should.

However I would be phoning HMRC now as you are on an emergency code for the main pension when there should be no need for it.

Domain.Rider

jem16 wrote: »

.. What did you do with your P45 from work?

I should have it somewhere in the pile

I'd be asking HMRC when they are going to issue 2 proper tax codes.

OK.

What did the P2 coding notice say about the D0 code - anyhting useful?

The P2 notice said "You need a tax code so the pension provider knows how much tax to take off. HMRC have worked out the main pension code, but we both need you to check that our information about you is correct."
That's when I rang to ask what figures they'd used, but they just said "We'd have used what you told us on the P161 (pension coding form)".

Is there any state pension involved?

No state pension for a few years yet.

Domain.Rider

jem16 wrote: »

Not necessarily. It would only be correct if your total income was over £43,875 by the amount that you expect to receive from your AVC pension - i.e. £6400 ( £9600/12 x 8). If it's not you will pay too much tax at 40%.

OK, good - that's the kind of stuff I can follow!

However I would be phoning HMRC now as you are on an emergency code for the main pension when there should be no need for it.

Right, will do.

Thanks a million for your calm and patient responses, it's been a great help :T

I know roughly what I need to do now

jem16

Domain.Rider wrote: »

I should have it somewhere in the pile

Your P45 should have been given to your pension provider so that they could apply the correct tax code.

The P2 notice said "You need a tax code so the pension provider knows how much tax to take off. HMRC have worked out the main pension code, but we both need you to check that our information about you is correct."

Did you get a P2 notice for your main pension?

jem16

Domain.Rider wrote: »

I know roughly what I need to do now

Sometimes HMRC need a little push in the right direction.

I have had many an interesting discussion with HMRC when they wanted to put a D0 code on my pension.

It's now BR as it should be.

robbieroy

jem16 wrote: »

I have had many an interesting discussion with HMRC when they wanted to put a D0 code on my pension.

It's now BR as it should be.

This is an interesting thread as I have just retired (early) from teaching and have just received my first monthly pension payment. I was impressed by how quickly the SSPA processed my pension.

Jem - from your posts around the forum, you are well-versed in these matters so I have a question for you (and maybe one or two later).
I have been given the (temporary?) coding BRM1 which (I think) means 20% basic rate tax deducted (without any personal allowances taken into consideration).
From what you say above, do you mean that pensions are always taxed using a BR code or will this eventually change to take account of a personal allowance (which would be £6475 in my case)?
Thanks in anticipation
RR

jem16

robbieroy wrote: »

I have been given the (temporary?) coding BRM1 which (I think) means 20% basic rate tax deducted (without any personal allowances taken into consideration).

Correct.

From what you say above, do you mean that pensions are always taxed using a BR code or will this eventually change to take account of a personal allowance (which would be £6475 in my case)?
Thanks in anticipation
RR

No pensions are not always taxed using a BR code. They will only be taxed this way if you also have another income such as a job or another pension.

In my case I am still teaching and receiving a pension from my late husband's scheme. The pension therefore is my secondary income at the moment.

If you are now reitred, your teacher's pension should be utilising your tax code of 647L. SSPA are quick enough to organise the pension but not so quick to organise the tax code, although to be honest this is not always their fault and relies on the councils passing on the info. My friend retired from teaching 18 months ago and was in a similar situation to you. Having phoned SSPA it transpired that South Lanarkshire Council had not, as yet, passed on the P45 info to them. They managed to put it right for her next payment.

I would give SSPA a ring first of all and find out what the situation is regarding your employment details being passed onto SSPA.

robbieroy

Thanks for your very clear and concise response Jem.
I just finished working at the end of October, so it is early days yet and I would be happy to give my employer (a University) a couple of month's grace before chasing things up, although it was not encouraging news about your friend!
Thanks again
RR

Domain.Rider

jem16 wrote: »

Your P45 should have been given to your pension provider so that they could apply the correct tax code.

Yes, I posted it to them.

Did you get a P2 notice for your main pension?

No, not yet - but if I chase them for a proper code, I should get one, I presume?

jem16

Domain.Rider wrote: »

Yes, I posted it to them.

They don't seem to have applied it then. You said your work was using 578L, yet you have been put on 647L - 1.

No, not yet - but if I chase them for a proper code, I should get one, I presume?

I'd have another go at contacting them. Don't accept "it will be whatever you have on your P161". Have all your figures ready and go through it with them and say that you would really like your tax codes sorted out asap as you don't want to either overpay or underpay and have to sort it in April.

If you are close to one of their enquiry offices it might even be a good idea to make an appointment to see them and sort it out there and then.

To be honest I have usually found them quite good over the phone but you do need to have your figures straight and be able to use them.