Tax implications of working and also taking my pension

Pursuit

Currently earn 53k per year. Put 45.5% into my workplace pension so pay very little tax. I have an DB pension of £14k from my previous employer. What tax rate are they likely to apply. If higher rate, do I claim this back at the end of each tax year? 

prowla

The pension is taxable income, isn't it?

Since your salary puts you just into the higher rate band (>£50k) already, the extra will be at 40%; in other words, your taxable income is £67k.

It should get sorted out when you do your annual tax return.

(One thing to do is not underpay on PAYG and then get a nasty surprise at the end of the year when you fine you owe the taxman a hefty sum.)

Dazed_and_C0nfused

What method is used for contributing the 45.5% (of £53k?).

Net pay or relief at source?

prowla

Dazed_and_C0nfused said:

What method is used for contributing the 45.5% (of £53k?).

Net pay or relief at source?

I was thinking about that too - if it's salary sacrifice, then that takes the taxable income down.

TVAS

14 + 29,415 =  £43,415 basic rate tax this is a simple calculation because even I did it. Am I missing something?
Why not pay another 14k to the pension so 14 + 24,415 then you will still remain a basic tax rate payer and still under the maximum pension contribution of 40k. 

Pursuit

Salary sacrifice is used to pay the 45.5%. My employer pays another 9.5% on top so approx 30k goes into my pension each year. My question relates just to my previous employer. Will they always take 40% tax and then it’s up to me to chase the taxman each year for a refund. 

Dazed_and_C0nfused

You are overcomplicating things.

Salary sacrifice means you aren't contributing 45.5% to a pension, you are agreeing to a reduced salary in return for your employer contributing the 45.5%.  That is why there is no pension tax relief with salary sacrifice, they are employer contributions.

For tax purposes you are earning c£29k so unless you have other income not previously disclosed will only be paying 20% tax on the DB pension.

Pursuit

So, just to be clear, there is nothing to do from my end with my previous employer or taxman. My previous employer will automatically deduct just the standard rate of tax currently @ 20%? 

LateStarter

Pursuit said:

So, just to be clear, there is nothing to do from my end with my previous employer or taxman. My previous employer will automatically deduct just the standard rate of tax currently @ 20%? 

I think you're getting confused about the role of your previous employer; while you were employed with them, money was put into a pension scheme on your behalf, which built up your entitlement in the DB scheme. Once you left, no further contributions would have been made in your name, and your "slice" would have frozen. 
The administrator of the scheme (which most likely is not your ex-employer) will withhold tax when you commence taking the pension based both on the rules of the scheme and their knowledge of your tax position - it's best to contact them to clarify further.

Dazed_and_C0nfused

Pursuit said:

So, just to be clear, there is nothing to do from my end with my previous employer or taxman. My previous employer will automatically deduct just the standard rate of tax currently @ 20%? 

They may operate the emergency tax code on the first payment, leaving you owing a little bit of tax, but HMRC should then notify them to use a BR (basic rate) tax code from the second payment onwards.

Pursuit

Thanks to everyone for your help.