What's it mean when you've got C.U.M. on your DB pension payslip?

itsmeagain

Jokes aside (else things may get messy & deleted), this is a genuine question.
I got my 1st DB pension payslip with months of backdate in Dec 2021. It took far more tax than I expected. The tax code was 1257L / Basis W1/M1
This month I got my 2nd payslip with lots of tax returned and the tax code had changed to 1257L / Basis '!!!!!!'.
Its actually written c u m (with no spaces) but MSE won't allow it because it presumptuously thinks i'm being rude!

Albermarle

Cumulative ?

itsmeagain

Albermarle said:

Cumulative ?

What's the significance of that, and why wouldn't my pension be cumulative from month 1?

eskbanker

https://www.gov.uk/tax-codes/emergency-tax-codes

Emergency tax codes

If you’re on an emergency tax code your payslip will show:

• 1257 W1
• 1257 M1
• 1257 X

These mean you’ll pay tax on all your income above the basic Personal Allowance.

You may be put on an emergency tax code if HMRC does not get your income details in time after a change in circumstances such as:

• a new job
• working for an employer after being self-employed
• getting company benefits or the State Pension

Emergency tax codes are temporary. HMRC will usually update your tax code when you or your employer give them your correct details.

molerat

Your first pay was taxed on the emergency code as they had not been advised which code to use, the month was taken as stand alone with 1/12th of the annual allowance so lots of tax.  The next was at the normal cumulative code advised by HMRC and will have taken account of all previous income and tax allowances bringing you up to date.

itsmeagain

molerat said:

Your first pay was taxed on the emergency code.  The next was at the normal cumulative code advised by HMRC and will have taken account of all previous income and tax allowances bringing you up to date.

Thanks. But the tax code has not changed. It's only the 'basis' that's changed. Why was it necessary? Is seems inconceivable that neither my employer or HMRC needed to use something in an emergency in the 1st place? They both know my previous employment/income prior to becoming a pensioner of the same company.

Marcon

itsmeagain said:

molerat said:

Your first pay was taxed on the emergency code.  The next was at the normal cumulative code advised by HMRC and will have taken account of all previous income and tax allowances bringing you up to date.

Thanks. But the tax code has not changed. It's only the 'basis' that's changed. How is it conceivable that neither my employer or HMRC needed to get it wrong in an emergency in the 1st place? They both know my previous employment/income prior to becoming a pensioner of the same company.

Because the pensioner payroll is run entirely separately from the employer payroll and it sounds from your original post as if the whole process (issuing a P45 to reflect the fact you'd left employment, setting up the pension etc) didn't give HMRC time to process the P45 and issue a new tax code.

itsmeagain

Marcon said:

itsmeagain said:

molerat said:

Your first pay was taxed on the emergency code.  The next was at the normal cumulative code advised by HMRC and will have taken account of all previous income and tax allowances bringing you up to date.

Thanks. But the tax code has not changed. It's only the 'basis' that's changed. How is it conceivable that neither my employer or HMRC needed to get it wrong in an emergency in the 1st place? They both know my previous employment/income prior to becoming a pensioner of the same company.

Because the pensioner payroll is run entirely separately from the employer payroll and it sounds from your original post as if the whole process (issuing a P45 to reflect the fact you'd left employment, setting up the pension etc) didn't give HMRC time to process the P45 and issue a new tax code.

I actually got my p45 when I left in June and it took them months to pay the pension. It's the same payroll team to contact for my pension as it was for my employment. Any way, it looks like it's fixed now. Still don't understand why an emergency tax shouldn't consider previous employment earnings?

molerat

Did you give the P45 to the pension payer ?

Marcon

itsmeagain said:

Marcon said:

itsmeagain said:

molerat said:

Your first pay was taxed on the emergency code.  The next was at the normal cumulative code advised by HMRC and will have taken account of all previous income and tax allowances bringing you up to date.

Thanks. But the tax code has not changed. It's only the 'basis' that's changed. How is it conceivable that neither my employer or HMRC needed to get it wrong in an emergency in the 1st place? They both know my previous employment/income prior to becoming a pensioner of the same company.

Because the pensioner payroll is run entirely separately from the employer payroll and it sounds from your original post as if the whole process (issuing a P45 to reflect the fact you'd left employment, setting up the pension etc) didn't give HMRC time to process the P45 and issue a new tax code.

I actually got my p45 when I left in June and it took them months to pay the pension. Any way, it looks like it's fixed now. Still don't understand why an emergency tax shouldn't consider previous earnings?

The inflexibility of our tax system. Think of it as similar to starting a new job - your new employer has to use an emergency code until HMRC advises the correct tax code, and that's what seems to have happened here. Your employer can't simply work on the basis that they 'know' what. your earnings were and shuffle them over to the pensioner payroll.

itsmeagain

molerat said:

Did you give the P45 to the pension payer ?

No. The employer gave it me when I left. I can still see it on their own system now. My company payroll team ARE the pension payroll team. It would be like giving it back to the person that gave it me in the 1st place.
But my understanding is that HMRC issues the tax code to the payroll. They must have had the P45 months ago also, plus known my previous income/employment. So, i still don't know what an extra month would have told them that they didn't already know in order to issue the correct tax code/basis?