Incorrect tax on pensions

Troytempest

Mrs Tempest has 3 small private pensions and until recently these were just under her personal allowance. Last August she started getting her state Pension which has resulted in various changes of tax codes and an incorrect amount of tax being deducted (over taxed).
The calculation is simple - 3 pensions plus State pension minus her tax allowance - tax due is 20% of total.

HMRC are saying the figures on her personal tax account look correct (she agrees) but the calculation of tax due is incorrect.

They say it will all be sorted out when they get all of the P60's - probably May. All well and good but we do not want to be overtaxed when the calculation is so simple. MrsT asked if she could just fill in a tax return but HMRC said no....

Is this situation normal.....

dunstonh

Yes it is normal as it involves the state pension which is paid gross but is taxable and three different income sources with three different tax offices.   Each one would have used a month one tax code.

So, the only way to sort this is wait until it sorts itself out.  Or complete a notification or return via self-assessment.  You can do this without the tax return:
https://www.gov.uk/government/publications/income-tax-repayment-claim-when-small-pension-taken-as-a-lump-sum-p53

Dazed_and_C0nfused

HMRC are saying the figures on her personal tax account look correct (she agrees) but the calculation of tax due is incorrect.

Could you expand on that to explain what is apparently correct and what calculation of tax due you are seeing (for 2021:22)?

Can you post your version of the calculation you think applies?

xylophone

You can do this without the tax return:
https://www.gov.uk/government/publications/income-tax-repayment-claim-when-small-pension-taken-as-a-lump-sum-p53

From what OP says  (or what I understand him to be saying), up to August 2021, his wife had been receiving her income from three different pension schemes (not taking pension/pensions as lump sums).

The form in the link would not be appropriate to these circumstances?

Troytempest

Yes prior to SP each of the three had own tax codes - all correct and no tax being taken.
After SP started she has had various codes with tax being taken from all 3 and being adjusted later.

Roughly her gross income from the 3 pensions plus SP is £18k and they have deducted approx £2k. Her tax allowance is the standard plus 10% of mine.

xylophone

 Her tax allowance is the standard plus 10% of mine.

I don't quite follow this.

Do you have this the right way round?

https://www.which.co.uk/money/tax/income-tax/tax-rates-and-allowances/marriage-allowance-explained-a5zku9t98m3j

Dazed_and_C0nfused

I think the op means she gets the Marriage Allowance tax reduction, not any extra allowances.  

Troytempest

Correct........and no lump sums

dunstonh

Sorry, misunderstood the reference to small pensions as being lump sums.    In which case, the form is not for that.  

xylophone

I think the op means she gets the Marriage Allowance tax reduction, not any extra allowances.  

Correct..

 OP, I am sorry to labour the point but can you confirm that your wife is the lower earner.

She has given up £1260 of her PA to provide you with a tax credit of £252?

See "cartoon" here

https://www.litrg.org.uk/tax-guides/tax-basics/what-tax-allowances-am-i-entitled

Therefore her PA for 21/22 is reduced to £11,310?

Troytempest

No, she is the higher earner so I have given her 10% of my allowance....