Tax on Pension & Salary

NarkT_Ov

How does PAYE work if I take on a salary whilst I have a pension that is using up my PA for the year.

Pension is £20K and salary would be £39.5k

Is the the PA used up on only the pension and then tax at correct rates taken from salary?

I expect I'd be paying 40% tax on some of it:mad:

jem16

NarkT_Ov wrote: »

How does PAYE work if I take on a salary whilst I have a pension that is using up my PA for the year.

Pension is £20K and salary would be £39.5k

Is the the PA used up on only the pension and then tax at correct rates taken from salary?

I expect I'd be paying 40% tax on some of it:mad:

You already had the answer in Post 2 when you asked this a short while ago.

Your pension will use your main tax code. Your salary will be allocated a BR or D0 tax code.

This year you are unlikely to pay 40% tax as it's part way through the tax year. Future years you will pay 40% tax.

https://forums.moneysavingexpert.com/discussion/5315633

NarkT_Ov

jem16 wrote: »

Your pension will use your main tax code. Your salary will be allocated a BR or D0 tax code.

Googled the above and came up with this, thanks
http://taxaid.org.uk/guides/information/issues-for-employees/employee/paye-with-two-jobspensions

If you have two jobs and your total taxable income from employment (after deducting your personal allowance) is greater than £31,785 in 2015-16, then you will be a higher rate taxpayer. This means that deducting tax at basic rate (a BR code) on any second employments at the basic rate may not be enough. You would need to contact HMRC, who should issue a tax code of DO so the second job is taxed at 40% rather than at 20%. The position will be more complicated if your second job / pension should be taxed partially at the basic and partially at higher rates of tax. (There is also a code D1 which charge which can be use to charge 45% additional rate tax on a second job)

jem16

NarkT_Ov wrote: »

Googled the above and came up with this, thanks

You're going to fall into the category of neither BR nor D0 being completely satisfactory as part of your job will be taxed at 20% and part of it at 40% from next tax year.

You will need to ensure that you contact HMRC with figures of expected income from each source. It is likely that they would give the job a BR tax code with a deduction made from your main tax code to take into account the 40% tax you will need to pay on some of your job income.