State pension and tax

mumps

margaretclare wrote: »

I can't imagine why you ever thought that. What happens is that your pensions income from all sources - state, private, annuities, whatever - is totalled up and you pay tax on whatever falls outside your tax allowance.

Not always correct, eg a Police Officer injured on duty can be awarded an injury pension which is not taxable. I think the same applies to firemen.

jem16

kuepper wrote: »

As for RTI hmrc correctly stated my exact state pension income for 2013/4 in the first tax code notice I got a few days after pension age

When did your pension start exactly? How much is it per week?

What tax code were you first given?

Can you give figures for your monthly private pension and how much tax has been paid so far?

so I don't get why a month later they've changed it and why my pension fund couldn't just use the first code for the rest of the tax year,

The pension provider has no option but to use the tax code that HMRC has given them.

surely with the revised code they will overtax me as I will hereafter be paying tax on every £ of income (pro rata of £7000 pvte £10000 state pa in round figures)

With £10k state pension, you would be on a K code normally as your state pension is using up all of your tax-free allowance. A K code means that you would be paying tax on all of your income plus more.

If you're happy to provide figures we may be able to help see if there is a problem with the new tax code or not. Without them only HMRC can tell you.

kuepper

jem 16 I know you're trying to help but just for reasons of privacy I don't want to give exact information about my personal finances on www. In original post I said my code was changed to 425L after I became entitled to state pension, now a few weeks later its BR without any change in my income / circumstances. I'll phone pension fund and tax ppl and maybe Tax Help tomorrow hopefully and post here if I clarify things (or need help)

xylophone

http://www.ageuk.org.uk/Documents/EN-GB/Information-guides/AgeUKIG16_Tax_Guide_inf.pdf?dtrk=true

You might try this http://www.ageuk.org.uk/money-matters/income-and-tax/tax-calculator/?stp=2

gardenia101

Jem16 - off topic slightly, but thanks for your excellent explanation of cumulative vs. non-cumulative tax codes. I was trying to explain it to a friend, but couldn't quite get the points across well - I shall point him in the direction of this thread :T

Kuepper - don't assume HMRC always get things right & I hope you get this sorted.

brewerdave

gardenia101 wrote: »

Kuepper - don't assume HMRC always get things right & I hope you get this sorted.

Spot on -I can speak from personal experience having spent several months (and numerous letters) arguing with HMRC on behalf of my wife,over the tax code she was given allowing for a second "job". They were charging it twice!!!:)

Oblivion

gardenia101 wrote: »

Kuepper - don't assume HMRC always get things right & I hope you get this sorted.

brewerdave wrote: »

Spot on -I can speak from personal experience having spent several months (and numerous letters) arguing with HMRC on behalf of my wife,over the tax code she was given allowing for a second "job". They were charging it twice!!!:)

Very true although it's not always HMRC's fault. My wife retired from teaching at the end of August and started drawing her pension from Teachers' Pensions on 1st September.

At first HMRC confirmed she would remain (correctly) on her existing tax code which is the full personal allowance. Then a couple of weeks later she got another letter from HMRC saying she would be on a BR tax code which effectively taxes you on every penny and your personal allowance goes out the window.

When we contacted HMRC it turned out that Teachers' Pensions (don't get me started! :mad: ) had notified HMRC of her pension but managed to do it twice using two different reference numbers, so HMRC thought she was in receipt of 2 pensions! Fortunately the very helpful chap at HMRC could see what had happened and cancelled one of the pension 'records' and put her back on code 944L.

kuepper

Anyway I phoned my pension fund first and they said they would be taxing all my pvte pension as per the recent code and they didn't know what HMRC were referring to in their notes to my coding.

I then phoned HMRC and the person I spoke to offered no explanation as to why my code had changed twice since I became a state pensioner, but said he would change it back to 425L "if that's what you want me to do". So that set alarm bells ringing about whether I was doing the right thing. He went on about mth1 blah blah blah which baffled me more but to cut a long story short my coding is going back to 425L and as far as I'm concerned that means I'll be better off financially - £1417 less tax than I thought I was going to have to pay? All I'm going to do now is wait for written confirmation of code 425L.

Thanks jem16 for bearing with me on this. And thanks for links xylophone. As it happens I just phoned Age Concern Tax Help and they went through my income and provided how much tax I should pay in current year and they told me to phone them back at the end of the year if the figures didn't tally so that's what i'm going to do. Panic over for now!

patanne

So your state pension is approx £99 per week? That is what your tax code implies. If that isn't the case you really need to post at least approx figures as at this rate you are going to have a big tax bill to pay at the end of the year. No-one is going to track this back to you.

ETA My experience when starting to take my state pension was - original tax code only took into account my basic state pension, I later got a new tax code which reflected the FULL amount I was going to receive. I assume they received notification from the DWP of the final amount. Could this be what has happened in your case?

jem16

kuepper wrote: »

jem 16 I know you're trying to help but just for reasons of privacy I don't want to give exact information about my personal finances on www.

Ok fair enough. However if you would like me to check the figures then send them by pm.

kuepper wrote: »

but said he would change it back to 425L "if that's what you want me to do". So that set alarm bells ringing about whether I was doing the right thing.

That would set alarm bells ringing with me too. If the tax code 425L is correct then no problem. However if it's wrong you're going to end up with a large bill at the end of the tax year.

You also mention receiving Incapacity Benefit in another thread. I'm assuming your state pension now takes over from this but have you taken account of the fact that it's taxable too?

As it happens I just phoned Age Concern Tax Help and they went through my income and provided how much tax I should pay in current year and they told me to phone them back at the end of the year if the figures didn't tally so that's what i'm going to do. Panic over for now!

And is the tax code 425L going to pay that amount? Did they work that out for you?