Early Retirement....First Week

jem16

Jack_Itin wrote: »

Jem, Tax code on last wage slip is 1066L......Jack.

It's your tax code on your pension I would like to know and not your employment.

Jack_Itin wrote: »

Regarding my tax code, why is it 1066, and not 1060 ?......I really don't understand such matters, so in plain English please......also, how will now being on a zero hours contract affect my tax code ?......with no set hours/wage, how do they calculate this ?.........any thoughts appreciated, Jack.

You have an extra £60 allowance which could be for something work related like uniform washing or professional subs or expenses. Do any of these apply? You should really contact HMRC today or Monday to explain that you have now finished work and are receiving a pension. If the extra £60 allowance no longer applies they can remove it and then allocate a correct tax code for your pension.

Your pension will have your main tax code, usually 1060L for this tax year. Your zero hours contract will also need a tax code. For a second income this would normally be BR which means that everything would be taxed at 20%. However if I remember correctly your pension would not utilise all of your tax free allowances so a split tax code might be best.

Have you started with the zero hours contract yet?

Jack_Itin

Yes, I started zero hours the day after I retired.......this zero hours contract won't put me above the PA limit.....so surely that 20% won't apply ?........Jack

jem16

Jack_Itin wrote: »

Yes, I started zero hours the day after I retired.......this zero hours contract won't put me above the PA limit.....so surely that 20% won't apply ?........Jack

Assuming you plan to stay within your personal allowance for total income, then it wouldn't apply overall. However a tax code has to be allocated to your 2nd income and that would normally be a BR tax code which will take 20% tax off. This would then have to be reclaimed at the end of the tax year.

A better way of doing this is to split the tax code to give some of your allowances to each source of income - ie if your pension was to be £9000, you could have a tax code of 900L for the pension and 160L for the job. HMRC may do this automatically but as they won't know your expected income for each income source the they probably won't do this immediately.

You will be better off phoning HMRC and giving them the expected income for each source of income and ask about splitting the tax code.

Jack_Itin

Got a letter this morning from pension administrator......the payment received is just the lump sum.... nearly £400 more than quoted, which is very good !!......first actual pension payment is due 1st June, backdated to 1st May....so 2 months pension to come, which is marvellous....the letter also says that HMRC will review my tax code ''in due course''......I shall still ring them on Monday........Jack.

Jack_Itin

Just dawned on me, if lump sum is more, then monthly pension may be more also......checked it out.......nearly £400 a year more !!....equates to about £30 a month extra......marvellous !!........Jack.

kidmugsy

oo's a lucky boy, then?

Jack_Itin

Yes....Checking original forecast, it did say ''this is just an estimate''......thought with my luck it would have been lower......happy days !!..............Jack.

jem16

Jack_Itin wrote: »

first actual pension payment is due 1st June, backdated to 1st May....so 2 months pension to come, which is marvellous

It's more than likely that your pension is paid in arrears so I would expect the 1st June payment just to cover one month - ie the month of May.

the letter also says that HMRC will review my tax code ''in due course''......I shall still ring them on Monday........Jack.

It may be too early if your pension provider has not yet asked HMRC for a tax code. However you may as well try but try to phone about 7:45am if you don't want to hang about in a queue.

Jack_Itin

Jem, It says in letter ''first payment will be made on 1st June 2015.....and will be for the period 1st May 2015 to 30th June 2015 so looks like I will get 2 months.........Jack.

jem16

Jack_Itin wrote: »

Jem, It says in letter ''first payment will be made on 1st June 2015.....and will be for the period 1st May 2015 to 30th June 2015 so looks like I will get 2 months.........Jack.

That's different then but you hadn't said that earlier.