Tax on pensions

vigman

I will shortly be retiring on ill health grounds and should receive 14K pa from one scheme and 3K pa from another.

How will the tax be handled on this, please?

Will both deduct using my standard code and I have to claim back?....or will they be paid gross?

As they are not coming from one source I can't see how the correct tax will be deducted?

TIA

Vigman

somethingcorporate

I think it is the same as if you have 2 jobs. One will have your standard tax code (with your full allowance) and the other will be taxed at base rate.

molerat

When you finish work send your P45 to the £14k provider and they will apply your allowances to that pension the same as changing jobs, the first payment may be taxed incorrectly but it should correct itself once the P45 is applied. The second provider should tax at BR but once you get full details it will be worth contacting your tax office to make sure they get things straight.

CLAPTON

if you received standard allowance on both your pensions then you would have UNDER paid rather than overpaid.

you want your standard allowance i.e. using taxcode 747L applied to the larger pension (as suggested, make sure they have your P45) and then you will be allocated taxcode of BR on the smaller pension; this means you will be taxed at 20% on the smaller pension

vigman

Hi

A couple more questions please.

If my employer is paying my main occupational pension through the LGPS scheme and my secondary occupational pension is taxed at 20%, will I have to fill in a self assessment tax form from now on or is this handled by the ex-employers?

I will be retiring on Tier 1 ill health grounds which means I can't work 30 hours per week over rolling 12 months until I am 65. Can I take a few hours of paid employment without affecting my occupational pensions?

Thanks

Vigman

dunstonh

In the first year or two it is not uncommon to get a tax return. However, even if you dont, the onus is on you to get it right.

It can be handled different ways depending on amounts and tax office but the main way is that the larger income gets the personal allowance and the other income is taxed fully at basic rate. Sometimes one income may be paid gross with the tax collected via the other using a deduction in your personal allowance.

Can I take a few hours of paid employment without affecting my occupational pensions?

The only impact would be tax (or benefits if you were one them)