Retiring part way through the tax year

sleepymans

Please could someone advise me?


I will be working until this summer, at which time I will retire (though below state pension age, so no income from that source at all during this tax year). I am however already in receipt of a workplace pension which is taxed at source (code BR) I pay PAYE on my salary and have the£10k personal annual tax allowance on the salary part.


When I retire my only income will be the workplace pension which will rise a little but in total it will be an amount below £10k .


Will my pension be paid without deduction of tax? If so how do I get it changed and how long will it take? I will be in financial hardship if I carry on getting the pension taxed at BR.


Also will I get a rebate on the tax paid from the start of the tax year up to the last salary payment? How should I claim it?


Finally, Can I fill in a form to get my bank and building society interest gross as I wont be a taxpayer? Its not much, but why pay more tax than necessary!


Any info gratefully received.

purdyoaten

sleepymans wrote: »

Please could someone advise me?


I will be working until this summer, at which time I will retire (though below state pension age, so no income from that source at all during this tax year). I am however already in receipt of a workplace pension which is taxed at source (code BR) I pay PAYE on my salary and have the£10k personal annual tax allowance on the salary part.


When I retire my only income will be the workplace pension which will rise a little but in total it will be an amount below £10k .


Will my pension be paid without deduction of tax? If so how do I get it changed and how long will it take? I will be in financial hardship if I carry on getting the pension taxed at BR.


Also will I get a rebate on the tax paid from the start of the tax year up to the last salary payment? How should I claim it?


Finally, Can I fill in a form to get my bank and building society interest gross as I wont be a taxpayer? Its not much, but why pay more tax than necessary!


Any info gratefully received.

If I were you, I would be ringing HMRC to ask for all of your personal allowances to be set against your pension income immediately and have the code BR operated against your employment income. While this may mean that your tax is still not correct (depends how much below your pension is below the personal allowance of £10000), it will remove the hardship element from the summer onwards. At the end of the tax year, you should ask HMRC to review the whole year - your overpayment should be equal to 20% of the amount that your pension is under £10000.

Not perfect - but a workaround solution.

On the savings income, you can only have this paid without tax if all of your income, including the interest on savings, is below £10000.

xylophone

Your pension income plus your salary for three or four months will be greater than your tax allowance? You will not be able to register R85 for savings interest but you might still be due a repayment of tax.

http://www.hmrc.gov.uk/pensioners/paying-retire.htm

sleepymans

I would estimate that my gross salary for 3 months would be about £4,500 and pension for 12 months would be about £5000 meaning my total taxable income for 2014/15 would be under £10,000. The interest on savings which are not sheltered in ISAs would be less than £500 in the same tax year. If I will have 20% deducted from all of it (even if I eventually get a rebate after April 2015) I will be in serious financial do-doos by the end of this year.


Its unfair for PAYE to become PAYDE for so many months!


Perhaps letters to employer, MyCSP and my tax office need to be sent, if there are no obvious forms to fill in.


I am so looking forward to having so little money in 2015/16 that I am out of the clutches of PAYE for the first time in nearly 50 years! lol

zygurat789

sleepymans wrote: »

I would estimate that my gross salary for 3 months would be about £4,500 and pension for 12 months would be about £5000 meaning my total taxable income for 2014/15 would be under £10,000. The interest on savings which are not sheltered in ISAs would be less than £500 in the same tax year. If I will have 20% deducted from all of it (even if I eventually get a rebate after April 2015) I will be in serious financial do-doos by the end of this year.


Its unfair for PAYE to become PAYDE for so many months!


Perhaps letters to employer, MyCSP and my tax office need to be sent, if there are no obvious forms to fill in.








I am so looking forward to having so little money in 2015/16 that I am out of the clutches of PAYE for the first time in nearly 50 years! lol

You have the right to tell HMRC which income source to set your personal allowance against.

xylophone

If you find that your estimates are out and you cannot register R85 see
http://www.hmrc.gov.uk/taxon/worked-examples.htm

For the tax year 2015-16 onwards https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/293747/Fact_sheet_template_-_10__tax_9.pdf

jennifernil

I think I would be writing down all my figures for total earnings expected, total pension expected and total interest expected for 14/15 and if that is under £10000 then registering for gross interest now.

Then I would dig out my coding notice and ring the number given on it and ask them what can be done.

Certainly once you have stopped working, your code number can be transferred to your pension.

patanne

Your employer & your pension can do nothing about how you pay tax without instructions from HMRC. I wonder if you might not be best getting them to split your code between the two, making sure that one JUST covers your pension & then contact them after you have retired for a refund of tax paid on your salary.

purdyoaten

jennifernil wrote: »

I think I would be writing down all my figures for total earnings expected, total pension expected and total interest expected for 14/15 and if that is under £10000 then registering for gross interest now.

Then I would dig out my coding notice and ring the number given on it and ask them what can be done.

Certainly once you have stopped working, your code number can be transferred to your pension.

Agreed - the op should ask HMRC to allocate £4500 of his allowances to his PAYE source and £5500 to his pension. However, it appears that there would be no need to alter the code against the pension after ceasing employment as the annual pension is less than £5500.

jennifernil

I think he might also get sent a form, is it 161 or something like that, to fill up regarding pensions so they can get the code correct as soon as possible, certainly my husband did when he retired.

purdyoaten

blondebubbles wrote: »

I think the P161 is for when you are born before before 6 April 1948

Spot on !!!!!!!!