Tax Code change when 65

GeorgeAC

I`ll shortly be 65, the end of September in fact.
My question is, when will my tax code change?
Off the top of my head it`s 647L at the moment and when I`m 65 it will be 949? not sure what letter yet.

I need to know because I`m going to take my private pension has a lump sump as it is not a big pot. I get pension credit at the moment but roughly 50% of my income is tax free as its Industrial Injuries which I`ll lose when I`m 65.

I`m trying to work out if I`d be better cashing the pot in a little early or is it best to let it run its full term.
Thanks for any help.
GeorgeAC

[Deleted User]

AFAIK your tax code should change on your 65th birthday

System

HMRC usually issue a P161 (pension coding form)

http://www.hmrc.gov.uk/forms/p161-man.pdf
as you approach your 65th birthday to see if you are actually entitled to receive your extra age allowance as it is means tested.

In the 11/12 tax year your tax free allowance would be £9940 provided your total taxable income does not exceed £24K. If it does exceed that threshold then for every £2 your income goes above £24K the allowance will reduce by £1

http://www.hmrc.gov.uk/rates/it.htm

If you don't return the form they won't give you the allowance.

Mikazaru

I think the tax code changes at the begining of the tax year in which you turn 65, so yours should change this April.

Its affected by other income though, the allowance reduces if your income is over £24000 I think.

Edit - Explained much better above!

wildbri

If I remember correctly, the tax code covers the whole of the year you are 65, that means you can claim the new tax code after april 6th.

I believe 25% of your lump sum is tax free but you should call your tax office because the rules change from time to time.

Have a good retirement, if you have worked 50 years like I did then you h
have deserve it.

regards bri :j

System

wildbri wrote: »

If I remember correctly, the tax code covers the whole of the year you are 65, that means you can claim the new tax code after april 6th.

Whilst this is true as regards to being entitled to the higher personal allowance for the whole of the tax year HMRC would not allocate that allowance unless the taxpayer can provide a reasonable estimate of their total taxable income for the year. Hence the issue of the P161.

The taxpayer does not need to wait for the P161 to be sent to them they can download it themselves. However there is no point sending it in if the taxpayer intends to claim their state pension but does not yet have the details about how much they are going to receive.