Tax on private pension .

alfmurph

My wife was a 41% tax payer in scotland until she took early retirement in august 2020 .
We had done the calculations and choose to take a pension of 12k annually plus a lump sum . We also knew until she wass 66 she would not get oap but planned to use lump sum now and again until this happened .
She gets £850 per month from this pension . I thought she would receive £1000 per month and pay no tax . When we contacted tax office they said yhey were aware she had stopped working .
Does that mean she is paying too much tax until april 2021 when it will be adjusted and hopefully a rebate as well.

NottinghamKnight

The tax year runs from April so your wife will have exceeded her personal allowance this year, so will be taxed on all earnings until april, after april it should work as you think. She may be due a refund of tax on anything paid initially assuming 41% tax was being taken in the early part of this tax year, best to do the sums at the end of the tax year and apply for a refund if applicable.

Dazed_and_C0nfused

alfmurph said:

My wife was a 41% tax payer in scotland until she took early retirement in august 2020 .
We had done the calculations and choose to take a pension of 12k annually plus a lump sum . We also knew until she wass 66 she would not get oap but planned to use lump sum now and again until this happened .
She gets £850 per month from this pension . I thought she would receive £1000 per month and pay no tax . When we contacted tax office they said yhey were aware she had stopped working .
Does that mean she is paying too much tax until april 2021 when it will be adjusted and hopefully a rebate as well.

You need to think in actual figures not annual.

What did she earn (taxable income not salary) until August?

How much pension will she take in the current tax year?

As NottinghamKnight says chances are there is a tax refund due as she is unlikely to be a 41% payer in the current tax year.  This may be refunded by the pension company of you can get an accurate (cumulative) tax code sorted out between now and April.