Tax payable on Small private pension whilst still working

robertaw

Can anyone tell me how I can find out how much I should be taxed on a small private pension I have started receiving during last year. HMRC have now told me I must pay 40% on the pension which seems excessive!

Can anyone tell me where I can check this out.

JoeCrystal

Well, yes. After all, pension income is considered like any other income. So if you are on higher rate tax, then aye, you do pay 40% of it.

If you are not on higher rate tax, then something is wrong.

Cheers,
Joe

jem16

robertaw wrote: »

Can anyone tell me how I can find out how much I should be taxed on a small private pension I have started receiving during last year. HMRC have now told me I must pay 40% on the pension which seems excessive!

Can anyone tell me where I can check this out.

Your pension is treated just the same as any other taxable income. If you already earn more than £41,450 you will pay 40% tax on your pension.

Are you already a 40% taxpayer?

atush

And if you are a HRTaxpayer, why have you elected to take your pension? Could you not have waited until later?

In any case, if you don't need this income, and don't want to pay 40% tax on it, then put the income into a pension.

jamesd

The pension is normal PAYE income subject to income tax like any other taxable income. Not subject to NI.

As atush wrote, you have the option of paying the income into another pension subject to the annual contribution limit that applies to you. You'll gain from the tax relief on that because at a minimum you'll accumulate another tax free lump sum, so you gain by the tax on 25% of whatever you pay in, plus any growth.