New tax code now that I receive State Pension.

JohnB47

Hi all.

Just thought I'd clarify what's going to happen here. I've recently started receiving my state pension - SP date was in December 2016. I'm expecting my first payment near the end of Jan 2017.

I've just received my notice of tax coding and my tax code has been calculated so that I will pay, between now and 5th April, a full years tax due (20%) on my State Pension. So it means that I will overpay by receiving less from my other source (a company pension). My tax code has gone from 1210M to 458M X.

The notice does say that they will review the tax paid after 5th April (that's what the 'X' means).

So what will happen then? Will they adjust things so that next years tax due is accurate and give me a lump sum refund, which I calculate is £1156? Or will they adjust next years tax code to spread the overpayment refund over the year?

Also, why can't they just pay me the SP net of tax, like my company pension and part time pay? (Silly question perhaps.)

Edit: I haven't filled in a tax return for years.

Thanks.

xylophone

SP is always paid gross - if you receive occupational pensions/salaries in addition to your state pension, the tax code (s) on these are (if possible) adjusted so that you pay the correct amount of tax.

Otherwise, you self assess and HMRC will arrange for you to pay the correct amount of tax direct to them.

https://www.gov.uk/tax-on-pension/how-your-tax-is-paid

JohnB47

Thanks.

My questions were really aimed at what will happen to redress the imbalance of tax paid for the remainder of this year.

bigfreddiel

I'm in exactly the same position, but one of my occupational pensions is taxed, my sp is paid gross

Get yourself a self assessment form and complete it - 2016/17 can be completed sometime after April 2017

It's all very simple.

Every year i get a rebate because my earnings come from multiple sources, 2 pensions, part time job and sp

Good luck fj

JohnB47

Yes, you sound like you're in exactly the same position as me. I also have 2 pensions, a part time job and sp.

I did fill in a tax form for many years but managed to get out of it by writing to HMRC and saying that my situation was very static. They agreed and I haven't filled one in for a long time.

I'd really like to avoid that yearly chore, so any idea what will happen if I don't opt for the self assessment form? After April this year, all my tax will be predictable again, like it was before my SP started, so an ongoing form filling process won't be necessary.

Also, what type of rebate do you get? Lump sum?

33Lurcher

Reached SP age this week and although I haven't yet received any tax code notification I have just checked my online status and note that its change from 1100L to 461L to reflect my state pension payments .
My occupational pension provider has been given the new tax code .

NordicNoir

JohnB47 wrote: »

Hi all.

Just thought I'd clarify what's going to happen here. I've recently started receiving my state pension - SP date was in December 2016. I'm expecting my first payment near the end of Jan 2017.

I've just received my notice of tax coding and my tax code has been calculated so that I will pay, between now and 5th April, a full years tax due (20%) on my State Pension. So it means that I will overpay by receiving less from my other source (a company pension). My tax code has gone from 1210M to 458M X.

The notice does say that they will review the tax paid after 5th April (that's what the 'X' means).

So what will happen then? Will they adjust things so that next years tax due is accurate and give me a lump sum refund, which I calculate is £1156? Or will they adjust next years tax code to spread the overpayment refund over the year?

Also, why can't they just pay me the SP net of tax, like my company pension and part time pay? (Silly question perhaps.)

Edit: I haven't filled in a tax return for years.

Thanks.

You have slightly misunderstood your tax code.

HMRC have adjusted it to assume that you will receive £7520 state pension per annum....BUT they have your code as 458M X, so your tax will now only be calculated on a monthly basis, rather than cumulative, until the end of the tax year.This will mean that you will only be taxed on the actual amount of pension you receive, rather than a full year. So, you should pay the correct amount of tax with nothing more for you to do.

Next tax year, you will revert to a cumulative tax code.

DancingBadger

JohnB47 wrote: »

My questions were really aimed at what will happen to redress the imbalance of tax paid for the remainder of this year.

You should receive a rebate of any overpaid tax for the current tax year. I waited until the end of April last year, calculated my income and tax paid, then phoned HMRC. They checked my figures there and then, and paid the refund visa BACS two weeks later.

...and during that conversation I also told them my expected income for the current tax year to enable them to issue the correct code.

JohnB47

Ah yes, you are correct.

I was doing some sums just now and realised that was thinking, wrongly, that they planned to take a years worth of SP tax off me in three months, then sort things out later. Silly me.

I see what you mean - the adjusted tax code means I will pay less on my company pension but this will be matched by my not paying tax on my SP.

So as you say, nothing for me to do.

Thanks for clarifying that.

sleepymans

To be honest....its a complete f-up, designed to muddy the waters so that pensioners are put in a confusing position and thus over taxed......its designed to deter us from being able to avoid overpaying tax and be confused therefore not claiming overpaid tax.

The usual government fudge/rip off

bigadaj

sleepymans wrote: »

To be honest....its a complete f-up, designed to muddy the waters so that pensioners are put in a confusing position and thus over taxed......its designed to deter us from being able to avoid overpaying tax and be confused therefore not claiming overpaid tax.

The usual government fudge/rip off

To be honest it appears you are a bit dim and don't understand the fairly simple procedures that need to be followed to ensure that your tax code is correct and you pay appropriately.