No tax allowance given on pension – don’t know why, advice please.

Grrra

Hi,
Hopefully this is in the right place to post this question.
I could do with some advice, please.
Recently retired – no state pension yet. For the first two months my pension has been paid directly into my bank. As I understand things, you are allowed £7457 tax allowance. This left me with £2725, to be taxed at 20% (£545) leaving me with a monthly income of just over £800. The first couple of months this was the case. I am now being taxed on the full amount with no tax allowance.
The last two months 20% has been taken from the full pension amount of £10,200, leaving me with about £680 per month. A shortfall of over £120 a month, which is worrying.
No one has contacted me about this situation. Does anyone have any ideas what is happening? Is there something I’ve missed..?
Your advice/help would be very much appreciated.
Take care.

jem16

Presumably you are being taxed with code OT being used?

Have you sent your P45 to the pension provider or completed a P46 for them? If you have done neither this is why code OT is being used.

Grrra

Hi,
Many thanks for replying so quickly - much appreciated.
Firstly, what is, 'code OT'?
Secondly, I did fill out and post the form P46 about 3/4 months ago.
Take care.

jem16

Grrra wrote: »

Hi,
Many thanks for replying so quickly - much appreciated.
Firstly, what is, 'code OT'?

OT means zero personal allowance so all taxed at 20% or 40% depending on income.

Secondly, I did fill out and post the form P46 about 3/4 months ago.
Take care.

Can you confirm what tax code is being used on your pension?

Is your pension your only income?

Grrra

Hi,
Thanks for the meaning of 'OT'.
Concerning. 'what tax code is being used on my pension', I am afraid to say that I really don't know. I thought my pension provider had it all sorted out... with the first two payments being what I had expected.

The last piece of paper form the tax office that I have states; 'Your new tax code for the year 6 April 2011 to 5 April 2012 is 852L'.
But, presumably this was whilst I was in full time employment.
My pension is not my only income. I receive about £150 per month from the Prudential, 'Income Choice Annuity.
I also have a lump sum invested in a building society which annually should produce around £800.

I hope that clarifies things a bit and thank you once again.
Take care.

jem16

Grrra wrote: »

Hi,
Thanks for the meaning of 'OT'.
Concerning. 'what tax code is being used on my pension', I am afraid to say that I really don't know. I thought my pension provider had it all sorted out... with the first two payments being what I had expected.

You really need to find out. It could be BR or 0T. Then again it could be something else - without knowing no-one can really help.

Your pension provider may well have been using the emergency code of 747L initially but obviously something has changed.

The last piece of paper form the tax office that I have states; 'Your new tax code for the year 6 April 2011 to 5 April 2012 is 852L'.
But, presumably this was whilst I was in full time employment.

It would normally say who this tax code is used with. What does it say? Also when did you receive it?

My pension is not my only income. I receive about £150 per month from the Prudential, 'Income Choice Annuity.

What tax code is being used for this annuity?

I also have a lump sum invested in a building society which annually should produce around £800.

That doesn't really matter at the moment.

Can you also clarify which box you ticked on the P46?

Also what happened to the P45 from your employer?

Grrra

Sorry about all this.
I guess I will need to contact my pension provider first thing on Monday morning to find out my code - but I can't think of anything that has changed. Oh well...

I received the tax coding 11th April, 2011. Am I correct in thinking, when you ask, 'who this tax code is used with?' that would be Lancashire County Council?

The Pru'; I have a letter which states:You are being taxed under the HM Revenue & Customs (HMRC) Pay as you earn scheme (schdule E). You will initially be taxed using the emergency code specified by the HMRC. If HMRC are unable to obtain your correct tax code, they will usually send you their form P161 for you to complete and return to them. So, far I have not received any 'form P161.

Not sure about which boxes I ticked on the P46... it was 4/5 months ago... Regarding the P45 - I do possess a copy!

Apologies for not being too clear about all this, but I'm not too sure how to progress on this issue.
Take care.

xylophone

852L - so you were entitled to another tax allowance over and above the personal allowance? Was this to do with your employment and has now been rescinded?
Does your pension advice slip not show the tax code being applied?
Is the annuity paid gross or net of tax?

Grrra

Hi,
Over and above the tax allowance of £7475 were; Earlier Years Adjustment = £873 and Professional subscriptions = £179. I am expecting the last one to be rescinded and quite possibly the, 'Earlier Years' too. At the moment I'm not receiving any allowance at all.

My pension, 'retirement benefits' slip does not show any tax coding being applied. And regarding your question, 'Is the annuity paid gross or net of tax?' - that I am not at all clear about. I can only refer you to my previous answer - the response from the Pru'.

Many thanks for your help.
Take care.

jem16

Grrra wrote: »

Sorry about all this.
I guess I will need to contact my pension provider first thing on Monday morning to find out my code - but I can't think of anything that has changed. Oh well...

You need to find out the code for this pension and for the annuity pension.

I received the tax coding 11th April, 2011. Am I correct in thinking, when you ask, 'who this tax code is used with?' that would be Lancashire County Council?

So that is obviously from your employment and not for your pension.

The Pru'; I have a letter which states:You are being taxed under the HM Revenue & Customs (HMRC) Pay as you earn scheme (schdule E). You will initially be taxed using the emergency code specified by the HMRC. If HMRC are unable to obtain your correct tax code, they will usually send you their form P161 for you to complete and return to them. So, far I have not received any 'form P161.

Is this the annuity provider?

Not sure about which boxes I ticked on the P46... it was 4/5 months ago...

Presumably you would have ticked Box C to say that you received another pension. Ticking Box C would see code BR being used.

Regarding the P45 - I do possess a copy!

Part 1 of the P45 would normally have been given to the pension provider. What parts do you have?

Apologies for not being too clear about all this, but I'm not too sure how to progress on this issue.
Take care.

Difficult to advise you when there are so many things you don't know the answer to.

Grrra wrote: »

Hi,
Over and above the tax allowance of £7475 were; Earlier Years Adjustment = £873 and Professional subscriptions = £179. I am expecting the last one to be rescinded and quite possibly the, 'Earlier Years' too. At the moment I'm not receiving any allowance at all.

I would expect you to have code 747L on your main pension and BR on your annuity pension.

My pension, 'retirement benefits' slip does not show any tax coding being applied.

Not sure what you mean by this. Is this your payslip for the pension? Which pension is it for?

You may be best to contact HMRC and find out what tax codes are being applied where. They may still be under the impression that you are still employed as I'm not sure what has happened to that P45.

Mikeyorks

For this new pension :

Grrra wrote:

For the first two months my pension has been paid directly into my bank

- did the provider not give you a forecast of what would be payable during 2011-12. Unusual if not .... and the Code in use would normally be on that forecast?