Pension and Tax

r_dog22

I plan to retire at the end of Aug 21. From Apr-Aug I'll be on my salary (greater than 50K, so i pay tax at 40%). Then, from Sept to Mar my income will be my pension. Over the entire year my income will be less than 50K. But when do I start paying tax at the lower (20%) rate - is it as soon as I retire, or do I have to continue the entire financial year at 40% and then claim back?

molerat

If you give the P45 to your pension provider you will be taxed at the correct level as soon as it is processed, your pension provider will simply be your "employer" in the same way as when moving jobs.

Marcon

r_dog22 said:

I plan to retire at the end of Aug 21. From Apr-Aug I'll be on my salary (greater than 50K, so i pay tax at 40%). Then, from Sept to Mar my income will be my pension. Over the entire year my income will be less than 50K. But when do I start paying tax at the lower (20%) rate - is it as soon as I retire, or do I have to continue the entire financial year at 40% and then claim back?

Will this be a company pension or one provided by a third party such as an insurance company? If it's the former, see https://www.gov.uk/employee-leaving and scroll down to the section headed 'Paying a company pension'.