Too Much Tax?

crazycakes

Can someone help me please, I'm very confused. My husband worked for 43 years in the same company and paid into his company pension fund. His gross monthly salary was taxed at 40%. He has now retired and to our dismay we find that his pension, which he struggled to pay into for so long, is being taxed again.

Is this right? Why is he being taxed twice for the same thing?

Many thanks if someone can answer this for me.

mildred1978

The pension contributions he made were tax free. Eg, he paid in £100 per month which was deducted from his gross pay before tax was calculated.

And he would only have paid 40% tax on a part of his wages, not the lot.

bankhater_1965

crazycakes wrote: »

Can someone help me please, I'm very confused. My husband worked for 43 years in the same company and paid into his company pension fund. His gross monthly salary was taxed at 40%. He has now retired and to our dismay we find that his pension, which he struggled to pay into for so long, is being taxed again.

Is this right? Why is he being taxed twice for the same thing?

Many thanks if someone can answer this for me.

simply because its classed as earnings either the company pension itself is over the personal income tax threshold esp if he is also claiming a state pension also ! anything over £7450 per year is taxable im afraid , it makes you wonder, i have a company pension due in 8 years time , no dout i shall pay tax aswell just like yourself

mildred1978

A worked example.

Annual salary of £60k
Tax code of £6k per year
Monthly gross of £5k
Pension contribution of £500 per month

Taxable monthly income £4500
less tax free allowance of 1/12 of £6k
First £2800 taxed at 20% = £560
£1200 taxed at 40% = £480

So a total of £1040 tax, or just under 21% of his gross wage.

mildred1978

bankhater_1965 wrote: »

simply because its classed as earnings either the company pension itself is over the personal income tax threshold esp if he is also claiming a state pension also ! anything over £7450 per year is taxable im afraid , it makes you wonder, i have a company pension due in 8 years time , no dout i shall pay tax aswell just like yourself

The standard tax free allowance is now £8105.

jem16

bankhater_1965 wrote: »

simply because its classed as earnings either the company pension itself is over the personal income tax threshold esp if he is also claiming a state pension also ! anything over £7450 per year is taxable im afraid ,

If he were to be old enough to claim his state pension, then he may well be able to have the higher personal allowance of £10,500 as long as total income is below £25,400.

bankhater_1965

jem16 wrote: »

If he were to be old enough to claim his state pension, then he may well be able to have the higher personal allowance of £10,500 as long as total income is below £25,400.

dont wish the mans life away :mad:

jem16

bankhater_1965 wrote: »

dont wish the mans life away :mad:

Why are you mad? You were the one who mentioned the state pension.