Adjustment to Tax rate band

Redcap8712

Hi folks,

Newbie here and looking for some advice on income tax here in Scotland.

I have a pension, 22k pa and recently started work again, 31k pa.

On checking the HMRC app today on my PAYE I saw that they have put an adjustment on tax band rate on my pension. So it has gone from S1257L to S58L. That's one huge drop.

My work tax code remains at SBR.

Can someone explain why the huge drop in my personal tax allowance for pension?

Thanks

molerat

Your new total income of £53K means you have gone from a basic rate taxpayer to a higher rate payer.  HMRC have calculated how much tax you should pay over the year and how much you will pay at 1257 / BR and adjusted the 1257 down to take into account the 21% and 41% tax that should be paid and collect it from your pension.  £53K at S1257L should deduct £10201 tax, £31K at SBR will deduct £6200 and £22K at S58L will deduct £4343 so a total of £10543 so not that far out and these adjustments always have a bit of stab in the dark about them.  There are other ways of doing it such as NT on the pension and SK943 on the job but the outcome is roughly the same, just where the tax is deducted from differs.

Redcap8712

Can you reduce this by..say private pension contributions and tax relief?

Dazed_and_C0nfused

Yes, but different methods (net pay, relief at source and salary sacrifice) all work in slightly different ways so you would need to understand which method you would be using to them understand the impacts and personal tax benefits.

Redcap8712

I'll speak to IFA to see what my options are. Thank you