Tax code changes

Merseydiver

I received my tax code update yesterday for 2022 - 2023. It has gone from 144L to 109L. The personal allowance figure has not changed but my State Pension has increased over the year by £349.00. As a result, this has reduced my tax free allowance to £1095. As I draw down a monthly figure from my private pension, which I have had to increase recently due to increased living costs, this will see my tax payments increase and reduce my net draw down, wiping out the planned private pension draw down increase and wipe out the benefit of the increased State Pension.

Dazed_and_C0nfused

Not sure what your question is?

The Chancellor deliberately kept the Personal Allowance at the same level but the State Pension has increase by about 3.1% (differs slightly for some individuals) so there will be less Personal Allowance left available to use against earnings or other pension income.

I don't understand your maths though.

Say your drawdown is £5,000.

This tax year (tax code 144L) you would get £4,289 after tax.

Next tax year (tax code 109L) you would get £4,219 after tax.

So you are getting an extra £349 in State Pension and paying an extra £70 in tax.  Overall you are £279 better off.

dunstonh

The personal allowance figure has not changed but my State Pension has increased over the year by £349.00. As a result, this has reduced my tax free allowance to £1095. 

Sounds about right.

As I draw down a monthly figure from my private pension, which I have had to increase recently due to increased living costs, this will see my tax payments increase and reduce my net draw down, wiping out the planned private pension draw down increase and wipe out the benefit of the increased State Pension.

your tax payments have increased as you are taking more taxable income.   That is how it works.