State pension and tax code query

RobM99

Hi all simple question here (I hope!)

I have a company pension and my tax code is the standard single person one -, 1257L.
From April 2022 I will receive my state pension and my new tax code is going down to 490L.
Is this because the state pension is taxable but not taxed - i.e. the company pension pays the tax?

molerat

Yes .

Why is your SP so low, are you not able to increase it ?

RobM99

a) Thanks, as expected.

b) I'm contracted out. The state pension will be £647 a month.

xylophone

I'm contracted out. The state pension will be £647 a month.

You were contracted out - CO ended for  DB schemes from 6/4/16 (for DC Schemes from 6/4/12).

When you say "a month" do you mean every four weeks? 

What is your stated weekly rate?

Are you able to improve your state pension with voluntary contributions?

RobM99

I don't want to pay more to get more, happy with things. I only wanted to check the tax code.

Albermarle

RobM99 said:

I don't want to pay more to get more, happy with things. I only wanted to check the tax code.

The point is that if you are able to buy more state pension, it will be the best investment you will probably ever make . It's a real bargain. 

Silvertabby

RobM99 said:

I don't want to pay more to get more, happy with things. I only wanted to check the tax code.

Are you sure about that?  If you can, buying post 2016 years, in round figures, would cost you £800 for an extra £5 per week index linked State pension.  As a basic rate taxpayer you'll get your outlay back after just 4 years - after that it's all profit.  

I'm very happy to have been able to buy 4 years, thus taking me up to the full single tier rate.

RobM99

Silvertabby said:

RobM99 said:

I don't want to pay more to get more, happy with things. I only wanted to check the tax code.

Are you sure about that?  If you can, buying post 2016 years, in round figures, would cost you £800 for an extra £5 per week index linked State pension.  As a basic rate taxpayer you'll get your outlay back after just 4 years - after that it's all profit.  

I'm very happy to have been able to buy 4 years, thus taking me up to the full single tier rate.

Hmmm...well worth considering  ...

xylophone

Hmmm...well worth considering  ...

Check with the Future Pension Centre.

https://www.gov.uk/voluntary-national-insurance-contributions

Albermarle

RobM99 said:

Silvertabby said:

RobM99 said:

I don't want to pay more to get more, happy with things. I only wanted to check the tax code.

Are you sure about that?  If you can, buying post 2016 years, in round figures, would cost you £800 for an extra £5 per week index linked State pension.  As a basic rate taxpayer you'll get your outlay back after just 4 years - after that it's all profit.  

I'm very happy to have been able to buy 4 years, thus taking me up to the full single tier rate.

Hmmm...well worth considering  ...

To buy in the open market an inflation linked pension of £5 a week would cost over £10,000 .......

Alice_Holt

Albermarle said:

RobM99 said:

Silvertabby said:

RobM99 said:

I don't want to pay more to get more, happy with things. I only wanted to check the tax code.

Are you sure about that?  If you can, buying post 2016 years, in round figures, would cost you £800 for an extra £5 per week index linked State pension.  As a basic rate taxpayer you'll get your outlay back after just 4 years - after that it's all profit.  

I'm very happy to have been able to buy 4 years, thus taking me up to the full single tier rate.

Hmmm...well worth considering  ...

To buy in the open market an inflation linked pension of £5 a week would cost over £10,000 .......

         Yes, if applicable buying post 2016 years is a very easy and financially obvious decision.  Particularly given the triple lock, and the current economic uncertainty.