One of my annuities paying 40% tax

xylophone

You referred to an income of around £20,000 per annum.

This would indicate annuity income of around £11,000 per annum - you have missed the Aegon annuity from the above?


It would be better to allocate your remaining PA after State Pension to one or two of the annuities, leaving the others at BR?


It would be a good idea to telephone HMRC ( around 7.45 am) and discuss the allocation of the remaining tax free allowance.

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/income-tax-enquiries-for-individuals-pensioners-and-employees

xylophone

Another thought, you say you have no savings income or income from shares - do you have any other source of income?

bullinn1

The Aegon was an error, the annuity is with them but the bank payment says "Scot Eq" - sorry for the confusion. No other income (I'm afraid) ... and OK I did say circa £20k sorry I maybe didn't add up the figures very accurately but surely the 'band' for basic rate - 20% - is up to £32k so is it not possible to "earn" up to £32k without reaching the 40% tax band ?

jem16

rogertb wrote: »

The Aegon was an error, the annuity is with them but the bank payment says "Scot Eq" - sorry for the confusion. No other income (I'm afraid) ... and OK I did say circa £20k

Yes but you did say you have 5 annuities and have only given details of 4 of them. I also asked if that was monthly figures or yearly but you haven't answered - I'll assume monthly but it would help to be clear.

You also haven't answered about Note 3 which is important.

sorry I maybe didn't add up the figures very accurately but surely the 'band' for basic rate - 20% - is up to £32k so is it not possible to "earn" up to £32k without reaching the 40% tax band ?

You also need to add in the tax free personal allowance to that. It is possible to have taxable income of £43k before reaching the 40% band.

Tax is all about detail and you're not giving us enough to fully answer your question. I would suggest you phone HMRC and discuss the coding arrangements with them - best time is around 7:45am. If your total taxable income is less than £43k there should be no need for any D0 tax codes.

bullinn1

Thanks Jem16 for your help. Until this new tax year I was earning a little £3K max per annum from some freelance work but that has now stopped. I have not, since 2004, earned anywhere near the £32K so my basic question has been why am I paying 40% ... I will telephone HMRC hopefully tomorrow.

Many thanks to all for being so patient and spending time helping me out.

Have a good week Roger

jem16

rogertb wrote: »

I have not, since 2004, earned anywhere near the £32K so my basic question has been why am I paying 40% ... I will telephone HMRC hopefully tomorrow.

The answer may be apparent in Note 3 - the adjustment to Rate Bands. They think you are a higher rate taxpayer.

How long have you had these tax codes for? Were they used last year too?

bullinn1

Again apologies for not replying correctly.

Note 3: "We have included this adjustment as you have more than one job or pension and we estimate some of your income is taxable at a higher rate"

These codes were sent to me a few months ago and to be quite honest I didn't pay much attention to the figures until I got a letter from the Pru last week revealing the 40% deduction.

No these codes were not used last year - indeed I haven't paid any tax for 4 or 5 years as I haven't earned enough - it's only this year when I turned 65 in August and started to receive state pension did the issue become significant ie it's the first time for a long time that I've gone over the personal allowance.

As ever thanks for taking the time - Roger

jem16

rogertb wrote: »

Note 3: "We have included this adjustment as you have more than one job or pension and we estimate some of your income is taxable at a higher rate"

Well somewhere, somehow along the line, they have got a wrong estimate of your income. Make sure you have the correct figures to give to them when you phone.

These codes were sent to me a few months ago and to be quite honest I didn't pay much attention to the figures until I got a letter from the Pru last week revealing the 40% deduction.

With multiple income sources like yours, it's always best to keep a close eye on your codes. You'll know to do this now.

HMRC will probably do this anyway but make sure they apply the main tax code - which should be 287L to your Scot Eq pension as it's the highest earner. The other codes should be BR.

By the way how much is the 5th annuity?

bullinn1

Thanks again ... I'll call them ... sorry the 5th annuity I cashed in a while back it was tiny so my quick guess "5" should have been "5" - apologies ....

jem16

rogertb wrote: »

Thanks again ... I'll call them

Let us know what happens please.