HMRC want £1129

zygurat789

nomunnofun wrote: »

34370 at 20% = 6874
2649@40% = 1059.60
Total = 7933.60

I thought that you only paid the tax rate you were currently paying on the state pension lump sum and that it didn't count to increasing your tax rate from 20% to 40%.


http://www.hmrc.gov.uk/pensioners/pension-later.htm#3

woolysheep

Sorry zygurat789, I'm not getting my head around your reply, can you explain further, please?

zygurat789

£26958 @ code 818L is £3753.60 PAYE
£26958 @ code 334L is £4721.60 PAYE

My wages program won't recognise 334LO or 334L0

nomunnofun

zygurat789 wrote: »

I thought that you only paid the tax rate you were currently paying on the state pension lump sum and that it didn't count to increasing your tax rate from 20% to 40%.


http://www.hmrc.gov.uk/pensioners/pension-later.htm#3

That was always my view - I agree with you - seems HMRC do not know this. I wish the op all the luck in the world in trying to explain this to HMRC!

zygurat789

woolysheep wrote: »

Sorry zygurat789, I'm not getting my head around your reply, can you explain further, please?

If you would post ten HMRC calculation it would help.
Specifically what do you not understand?

molerat

The tax rules for State Pension lump-sum payments are
different from the tax rules that apply to any lump-sum
payment that you may get from your employer’s pension
scheme or a private pension.
This means that, for the State Pension lump sum:
• if you pay no tax because your other income, including
any State Pension, is less than your personal allowance
you will not pay tax on your lump sum
• if you pay tax on any part of your other income,
including your State Pension, at 20% you will pay tax on
your lump sum at 20%
• if you pay tax on any part of your other income, including your
State Pension, at 40% you will pay tax on your lump sum at
40%, and
• if you pay tax on any part of your other income, including your
State Pension, at 50% or 45%, you will pay tax on your lump
sum at 50% or 45%.
Your lump-sum payment won’t put you into a higher rate of tax
than the rate that already applies to your other income. Also, if
you are aged 65 or over and due to get an increased personal
allowance because of your age, it won’t lower the personal tax
allowance that you might get.

...............................................

woolysheep

zygurat789 wrote: »

If you would post ten HMRC calculation it would help.
Specifically what do you not understand?

Hi just paying the 40% tax

woolysheep

Hi just paying 40% tax on pension

zygurat789

woolysheep wrote: »

Hi just paying 40% tax on pension

Which we all agree is incorrect.

Salary £26958 + pension 5220 = £32178 less Allowances 8185 = £23993 taxable. The 40% doesn't start until taxable income is £34370. The state pension lump sum does not affect this.

zygurat789

I still think your real problem is the P60 which does not look right.