Personal tax allowance split

Fireboss47

I recently began drawing a pension and receive monthly payments in addition to my part time job salary.
Could anyone advise on the best way of paying my income tax liability, is it better to have the whole amount taken out of my salary, my pension or to split the tax obligation between the two?

atush

TBHm it doesn't make a lot of difference. they are both income, and are combined as a figure and tax taken off one or tother.

What WILL make a difference is when in 2015 you can share 10% of your PA with a spouse.

mania112

I'm not even sure it's something you can manipulate?

patanne

If your pension income is greater than £10,000 per year then personally I would ask HMRC to give your full tax allowance to that income, they will do this at your request. This would mean that if you stopped working you would not have to make any changes, Whereas if it was all against your employment you would need to change the allocation if you reduced your hours or stopped working. Otherwise you can just ask them to split it in whichever amount seems best to you, preferably leaving tax due on both incomes.

mania112

^ Well, if you stopped working HMRC would notify Pension Provider of new tax code. It's an automated system.

BoxerfanUK

patanne wrote: »

If your pension income is greater than £10,000 per year then personally I would ask HMRC to give your full tax allowance to that income, they will do this at your request. This would mean that if you stopped working you would not have to make any changes, Whereas if it was all against your employment you would need to change the allocation if you reduced your hours or stopped working. Otherwise you can just ask them to split it in whichever amount seems best to you, preferably leaving tax due on both incomes.

I did exactly that, I retired and was re-employed by the same employer. I phoned the tax office and they put my full coding on my pension income whilst my re-employed income now has a BR (basic rate) code assigned to it.

xylophone

http://www.hmrc.gov.uk/incometax/check-multiple-codes.htm

Contact HMRC to make sure that you are being taxed correctly.

jem16

mania112 wrote: »

I'm not even sure it's something you can manipulate?

You can ask HMRC to allocate your tax codes in whatever way you choose. There are many people who have two or more incomes where at least one is less than their personal allowance. In this instance it's better to split the allowance over two or more tax codes.

mania112 wrote: »

^ Well, if you stopped working HMRC would notify Pension Provider of new tax code. It's an automated system.

It's supposed to be, yes. However in reality it often doesn't work. Where tax is concerned you are always advised to keep on top of your tax codes yourself.