How much tax do i pay ?

bigmex

I am currently on a salary of £23,373 and have recently been paid a company pensions at age 55 of £7,759 per annum - starting Nov 11. - The Tax office have just informed me that my salary tax code has been adjusted down to 233T and my pensions tax code to 514L - can anyone tell me if this is correct - it seems rather excessive - these code run through to April 2012

HappyMJ

Yes why claim a pension whilst you are still working? You will lose 20% of the pension in tax if you wait until you retire then you don't pay tax (not as much anyway) and you get a bigger pension. Anyway not all is lost if you can I would save an amount equivalent to your pension into a new pension which will offset the tax charged.

CLAPTON

your tax code add up as 223+514 = 747 which is the normal taxcode corresponding to a tax free allowance of 7475

however, in this tax year you pension will only be about 7759 x 5/12 = 3,232

so if the 534L code is applied against your pension of 3,232 you will pay too much tax this year

are you sure that the 514L is applied against your pension and not your main salary?

if this is so then phone HMRC and get it changed
I would suggest your full 747L against your salary and BR (meaning everything at 20%) against the pension

chrisbur

I assume that these new codes are being applied on a month 1 basis and that your normal tax code was 747L as this is what your two codes add up to. If this is correct then these codes will be just about correct, the only problem that might arise is if your salary is not equally spaced out over the months for example if there was a bonus. So it would be as well to give it a check at the year end but will proberbly be within a pound or two.