Why these Tax Codes - in easy terms

workingboy

Hi,

Query about my Tax Codes in easy terms.

I have 3 pensions per month.

State pension
Final salary pension
Private pension

All grossed @ £1460/mth

But I have 2 Tax codes,

BR is linked to my State and Final pension, and then
K156 linked to my Private pension (Starting this Tax year), previous Tax year 47P.

I've had no notification from the HMRC of any Tax owing, have no Tax credits or Benefits etc. just the pensions as my income.

As the first payment of the new Tax year has been received under the 'K' coding, I'm approx. £35/mth worse off.

So are the Tax codes correct in your opinion and could anyone explain why I have 2 Tax codes for the pensions, all 3 from different sources.

Thanks

jem16

workingboy wrote: »

Hi,

Query about my Tax Codes in easy terms.

I have 3 pensions per month.

State pension
Final salary pension
Private pension

All grossed @ £1460/mth

But I have 2 Tax codes,

With the above income, 2 tax codes is what I would expect and perfectly normal. Each source of income must have its own tax code except for the state pension which is paid gross but is taxable. It's usually taxed via a reduction in the main tax code.

BR is linked to my State and Final pension, and then
K156 linked to my Private pension (Starting this Tax year), previous Tax year 47P.

Ok that's not how I would expect it to be done. BR would normally be used for the 2nd income source - ie possibly your private pension. Your main tax code - in this case the K156 tax code would use your personal allowance minus your state pension amount.

Are you sure you have these the correct way round?

So are the Tax codes correct in your opinion and could anyone explain why I have 2 Tax codes for the pensions, all 3 from different sources.

Thanks

I've explained the use of the 2 tax codes. However your P2 Coding Notices would tell you how these codes are made up - notably the K156 code. What do they say?

To be more exact we would need to know the separate amount for each pension and not them all lumped together. If you want to post that we could help further.

workingboy

Firstly, sorry made mistake.

The K156 code is linked to my State and Private pension (£329/mth).

Personal................................£10500
state pension -£10299
Underpayment -£1775............-£12074

tax is due.............................-£1574

Reading it again, they do say I owe £355 from a previous year. When, I've no idea.

My Final salary pension (£356/mth) is BR


Yet reading further letters, I had a repayment of £474 from the Final salary pension Tax ref: for the 2012/13 year in July 2013.

thanks

Delphina

If you owe the tax, the deduction figure for that is correct (20% of £1775 is £355), but you should query it, rather than accept it!

Assuming the above-mentioned and the State Pension figures are correct, your codes for both PAYE sources are correct. If the main source has used up the tax-free allowance, the second source has to be taxed on BR (20%), given your gross annual income.

xylophone

http://www.thesalarycalculator.co.uk/salary.php

Try inputting your figures for the current and previous tax years here.