Partial Retirement- do you have different tax codes for Pension/Salary

Nebulous2

Dazed_and_C0nfused said:

Nebulous2 said:

jimi_man said:

Hi. I am in exactly the same position. The problem comes because you’ll be an HR tax payer, so you end up paying too much tax all the time, though it does eventually balance the following year. 

I use all my personal allowance on my pension (on the basis that it will be the case when I give up work). Then on all the earned income I use a BR tax code. Then everything over the HR limit I pay into a SIPP to bring it down to just under. 

Personally I cannot see the point in splitting your personal allowance over the two incomes. 

Every year at SA time, HMRC adjust my tax code to something ridiculous because they don’t understand how the pension payments work and think I’ll be earning too much under a BR code, but it’s easy enough to go onto your HMRC account and adjust it back to normal by artificially reducing your income. 

I find it better to take a proactive approach to it, rather than let HMRC do it as they don’t really like non-standard situations such as this. 

How do you notify them about the SIPP?  I don't need to do a self-assessment, have just notified them a reduced estimated salary for this year - I intend working less hours, but couldn't find a way to tell them about the money I paid into a SIPP last year? The website appears to say I need to phone them. 

You can either phone or send the details in writing.

But you only need to bother telling them if you are liable to intermediate rate (Scottish resident) or higher rate tax.  If not then the contributions are highly unlikely to have any impact on your tax position.

Phoned today - 30 minutes on hold. 

I paid £10k in for 20/21 and he said that was the most I could notify by phone. Anything over £10k would have required me to write. 

nigelbb

Nebulous2 said:

Dazed_and_C0nfused said:

Nebulous2 said:

jimi_man said:

Hi. I am in exactly the same position. The problem comes because you’ll be an HR tax payer, so you end up paying too much tax all the time, though it does eventually balance the following year. 

I use all my personal allowance on my pension (on the basis that it will be the case when I give up work). Then on all the earned income I use a BR tax code. Then everything over the HR limit I pay into a SIPP to bring it down to just under. 

Personally I cannot see the point in splitting your personal allowance over the two incomes. 

Every year at SA time, HMRC adjust my tax code to something ridiculous because they don’t understand how the pension payments work and think I’ll be earning too much under a BR code, but it’s easy enough to go onto your HMRC account and adjust it back to normal by artificially reducing your income. 

I find it better to take a proactive approach to it, rather than let HMRC do it as they don’t really like non-standard situations such as this. 

How do you notify them about the SIPP?  I don't need to do a self-assessment, have just notified them a reduced estimated salary for this year - I intend working less hours, but couldn't find a way to tell them about the money I paid into a SIPP last year? The website appears to say I need to phone them. 

You can either phone or send the details in writing.

But you only need to bother telling them if you are liable to intermediate rate (Scottish resident) or higher rate tax.  If not then the contributions are highly unlikely to have any impact on your tax position.

Phoned today - 30 minutes on hold. 

I paid £10k in for 20/21 and he said that was the most I could notify by phone. Anything over £10k would have required me to write. 

In March 2020 I paid £16K into a SIPP (grossed up to £20K bySIPP provider) & just notified HMRC by phone. They adjusted my tax code for 2019-20 & 2020-2021.