Aviva drawdown and tax deductions (Edit) - new additional quick question

dunstonh

Aviva will use the tax code provided by HMRC.  So, if they have the wrong tax code, then it's likely the fault is with HMRC as notifications for PAYE codes are electronic and mostly automated.

Sea_Shell

dunstonh said:

Aviva will use the tax code provided by HMRC.  So, if they have the wrong tax code, then it's likely the fault is with HMRC as notifications for PAYE codes are electronic and mostly automated.

Just checked on HMRC website, and the current tax year is still showing as "employer" Friends Life, with a tax code of 1224M.

This appears to be reflecting last (tax) years information, from the lump sum, not yet updated for this year and the new "employer" of Aviva, despite 3 months payments.

They are also showing an untaxed interest deduction of 1588*, but DH will have NO interest this year, as no interest paying accounts in his name.

so 12570 + 1260 - 1588 = 12242 = 1224M



*He had £1,305 in 21/22, and £1,611 in 20/21, so they appear to be projecting forwards...or is that guessing/assuming!!

I guess we just have to wait for it all to come out in the wash. 

Notepad_Phil

Sea_Shell said:

dunstonh said:

Aviva will use the tax code provided by HMRC.  So, if they have the wrong tax code, then it's likely the fault is with HMRC as notifications for PAYE codes are electronic and mostly automated.

Just checked on HMRC website, and the current tax year is still showing as "employer" Friends Life, with a tax code of 1224M.

This appears to be reflecting last (tax) years information, from the lump sum, not yet updated for this year and the new "employer" of Aviva, despite 3 months payments.

They are also showing an untaxed interest deduction of 1588*, but DH will have NO interest this year, as no interest paying accounts in his name.

so 12570 + 1260 - 1588 = 12242 = 1224M



*He had £1,305 in 21/22, and £1,611 in 20/21, so they appear to be projecting forwards...or is that guessing/assuming!!

I guess we just have to wait for it all to come out in the wash. 

Now I'm not saying that this is the same problem, but I had a similar issue myself in that having taken a lump sum and getting the overpaid tax back from one of my pensions, any new sources of pension income would not show up on my personal tax account and new tax codes never got sent out to the pension company (or indeed to me via a tax code notice).

Apparently there was some indicator that gets set which in my case hadn't been unset until I got in contact with the HMRC - maybe its the same or a similar issue?

Sea_Shell

We haven't contacted HMRC yet, but if they were to give that tax code of 1224M (as above) to Aviva, would Aviva then deduct even more tax?!?

Dazed_and_C0nfused

Sea_Shell said:

We haven't contacted HMRC yet, but if they were to give that tax code of 1224M (as above) to Aviva, would Aviva then deduct even more tax?!?

If the total paid so far in the current tax year (to tax month 3) is £3144 or more yes.

What has happened to Friends life though, has this pension ended?  Or could further payments be taken?  

HMRC don't have a crystal ball so pension flexibilities make it harder for them to know what, in your eyes, the "right" position is.

Sea_Shell

The Friends Life pension was cashed in, in full, during the previous tax year.

Tax (£4200) was deducted and reclaimed, as the taxable amount was within allowances.

We confirmed on the form that it was a "total pot" being cashed in, so they know that's finished/empty etc.

Sea_Shell

*UPDATE*

Aviva are now at least showing as DHs "employer" now, for the current tax year, but it shows tax code as "currently unavailable".

It states tax paid to date as £142.40, which we agree, as the amount deducted, and which will be due back.  

We're happy to just let it all come out in the wash, but wonder HOW that will be done?

By the end of the tax year, he will have paid tax of £240, which he will be due back.    For such small amounts, do they send a cheque, or amend the tax code (eventually) for the 23/24 tax year?

Dazed_and_C0nfused

Sea_Shell said:

*UPDATE*

Aviva are now at least showing as DHs "employer" now, for the current tax year, but it shows tax code as "currently unavailable".

It states tax paid to date as £142.40, which we agree, as the amount deducted, and which will be due back.  

We're happy to just let it all come out in the wash, but wonder HOW that will be done?

By the end of the tax year, he will have paid tax of £240, which he will be due back.    For such small amounts, do they send a cheque, or amend the tax code (eventually) for the 23/24 tax year?

https://www.gov.uk/tax-overpayments-and-underpayments

Tax overpaid in one tax year is never refunded via the tax code of a later tax year.

And a cheque is normally only sent if he fails to pull the overpayment into his bank account (see link above).