State Pension & New Tax Code

Oblivion

My wife receives a teachers pension. On the 6th November this year she reached State Pension Age and claimed it immediately.

Today she has received a notice of tax coding from HMRC which shows £10,600 personal allowance less State Pension £6084 leaving a tax code of 451LX.

That £6084 is a full year's worth (52 x £117.01 per week) but as she only started receiving her SP in November, by my reckoning she will only receive £2,108.18 in the current tax year. I gather the X indicates they will review the amount of tax paid after 5th April but that means she could be out of pocket for quite some time.

Is this a mistake by HMRC or is it normal for them to just wack in a full year's SP regardless of what will actually be received? Should I waste a few hours of my life and run up a huge phone bill querying this or will I be wasting my time?

JezR

Starting getting the state pension is one of the normal reasons for getting an emergency tax code - see here.

This means that 1/12th of the tax free pay represented by the code will in future be applied each month to the teachers pension. There may be an adjustment at the end of the year to account for any part month payment.

Oblivion

JezR wrote: »

Starting getting the state pension is one of the normal reasons for getting an emergency tax code - see here.

This means that 1/12th of the tax free pay represented by the code will in future be applied each month to the teachers pension. There may be an adjustment at the end of the year to account for any part month payment.

Ah right, that's ok then. If anything she'll be undercharged then since her code wasn't adjusted in time for the November payroll. Thanks Jez.

JezR

Do keep an eye on it though as taxation of multiple pensions can go wrong quite easily. More common though where the state pension is large and the private pension small.

jem16

Oblivion wrote: »

I gather the X indicates they will review the amount of tax paid after 5th April but that means she could be out of pocket for quite some time.

The X means use the tax code on a Mth1 basis - ie non cumulatively.

This means the correct tax will be taken from now on as opposed to the full year so correct to do this.

As you've worked out there will be an underpayment for November.