Tax on pension

Hercules_Grytpype-Thynne

Newly retired and completely ignorant of pension/tax, I have been informed by my ex employer that they will tax my pension, which is OK with me, but it makes me wonder how they are going to know about what I receive in State pension or is that not taxable and I will only have to pay tax on my company's scheme?


Cannot be that simple can it?

greenglide

The pension scheme will be given a tax code to use by HMRC. This will take into account and state pension and other income that they are aware of.

You will probably start of with an emergency tax code until they get this.

dunstonh

but it makes me wonder how they are going to know about what I receive in State pension

HMRC factor that into your tax code.

or is that not taxable

State pension is paid gross but is taxable (if income exceeds personal allowance.

Effectively, your tax code will be reduced by the amount of the state pension and any additional tax collected via the occupational pension. Although it may take a month or two to get to that point to allow HMRC to notify the occupational pension administrators.

HMRC often send out a short income questionnaire on retirement to get an understanding of your income.

Jack_Itin

It is advisable to ring HMRC and tell them your details......I received a new tax code last week, a month after retiring, which was wrong.......after advice given on this forum, I gave them a ring (took nearly 3 1/2 hours).....but it was sorted in a couple of minutes, and I am now waiting for 2 new tax codes (I have works pension and zero hours job).......HMRC "assumed" that zero hours job was another pension, strange I know......you MUST ring them........Jack.

jem16

Jack_Itin wrote: »

HMRC "assumed" that zero hours job was another pension, strange I know

It wouldn't really matter if HMRC assumed it was another pension as it's taxed in the same manner.

What matters most is that HMRC have all the details (ie amounts) on all taxable income so that they can issue a correct code.

teddysmum

My husband's state pension is greater than his allowance, so the tax due on the difference is collected from other income via a K code.

xylophone

https://www.gov.uk/tax-codes

You said in earlier posts that you had deferred taking your state pension for five years but were expecting to take it in this tax year - the amounts were either £142 a week or £197 a week.

You are now about to receive your occupational pension.

HMRC should issue a code to the occupational pension provider that reflects a deduction from your tax free allowance to cover the state pension you have chosen to receive.

Jack_Itin

My point is, that it pays to ring HMRC.....for whatever reason they gave me a BR code......meaning I would have paid 20% tax, o.k I could have claimed it back,......far better to get it sorted with a 'phone call (if you can get through) and give them your details......Jack.

t0rt0ise

Phone the tax office at 8 in the morning otherwise you can be on hold for over an hour.

dunstonh

I'm not sure of the need to make any phone call. Your pension provider will notify HMRC of the amount. HMRC will know the amount of your pension. You should automatically get put on the correct tax code within 2 months. If not, then you contact HMRC.

Hercules_Grytpype-Thynne

Thank you everybody!