I have a work pension & state pension & just checked my tax code 387L need help to understand please

hilary51

My work pension is £12026.56 pa before tax & my state pension is £8573.24 pa which totals £20589.80 before tax is applied, I have no other income.
Tax for my state pension is deducted from my work pension, so I added the two gross pensions for the year together & deducted the personal allowance for 22/23 of £12570.00 which leaves me with a taxable amount of £8019.80 so should my tax code be 801L? 

I rang the HMRC and they are telling my tax code of 387L is correct??
have I miscalculated or am I correct.

molerat

You are working it out backwards. The state pension is taxable but tax is not deducted at source so the annual amount is deducted from your tax code, the tax due is then collected from your other pension.  £12570- £8573 = £3997 so you should have a code of 399L. What is showing in your tax account for your state pension, what is the weekly amount, are there any other deductions shown in "What makes up your tax free amount" ?

hilary51

Thank You! so much for replying my fortnightly state pension is £329.74 so I divided this amount by  2 to get the weekly amount which is £164.87 then I multiplied by 52 to get the yearly amount of £8573.24.
So that’s where I went wrong adding both pensions together then deducting the personal allowance.

If I understand you correctly they take my state pension 8573.24 from the tax free allowance of 12570.00 which leaves me with £3996.76 still remaining of the tax free allowance so the tax code for my work pension should be 399L not 387L? so does this mean work pension of 12016.56 less the remainder of my tax free allowance of £3996.76 = taxable amount of £8019.80 is the amount I pay tax on?
I’m so sorry if I’m being thick, I’m 71 with onset vascular dementia & it takes me a while to understand things these days. 

Thank You for your patience.

hilary51

I can’t find my tax account but if I remember it said something about my employer contracting us out for a short period I think it was in the 1970’s hence the reason for me not getting the full state pension. Thanks again for helping me understand x

molerat

Your annual tax coding notice or your on line tax account will show how your tax code is made up.  It will show what HMRC have been told your SP is and any other adjustments to your code so you should check this to see how they have arrived at 387.

With a code of 387 you have an allowance of £3879 against your other pension so £8147 (12026 - 3879) being taxable and deducting £1629.40 tax (if not in Scotland)

squirrelpie

hilary51 said:

Thank You! so much for replying my fortnightly state pension is £329.74 so I divided this amount by  2 to get the weekly amount which is £164.87 then I multiplied by 52 to get the yearly amount of £8573.24.

You worked out the weekly amount correctly but there are 52.25 weeks in a year so your annual pension is £8614 There must still be some other factor accounting for your lower allowance.

molerat

squirrelpie said:

hilary51 said:

Thank You! so much for replying my fortnightly state pension is £329.74 so I divided this amount by  2 to get the weekly amount which is £164.87 then I multiplied by 52 to get the yearly amount of £8573.24.

You worked out the weekly amount correctly but there are 52.25 weeks in a year so your annual pension is £8614 There must still be some other factor accounting for your lower allowance.

Not for tax code purposes - usually 51 new and 1 old is the sum used for coding.

Dazed_and_C0nfused

hilary51 said:

I can’t find my tax account but if I remember it said something about my employer contracting us out for a short period I think it was in the 1970’s hence the reason for me not getting the full state pension. Thanks again for helping me understand x

You can start here.

https://www.gov.uk/personal-tax-account

Once you get into your account you need to look at the PAYE section for the current tax year and somewhere in there is a breakdown of how your code has been calculated.

Are you certain the £164.87 is the current tax years weekly amount?

hilary51

Yes I’m certain Thanks very much for helping

hilary51

Dazed_and_C0nfused said:

hilary51 said:

I can’t find my tax account but if I remember it said something about my employer contracting us out for a short period I think it was in the 1970’s hence the reason for me not getting the full state pension. Thanks again for helping me understand x

Once you get into your account you need to look at the PAYE section for the current tax year and somewhere in there is a breakdown of how your code has been calculated.

Are you certain the £164.87 is the current tax years weekly amount?

Apologies for not replying sooner but we had a death in the family.

I registered with gov.uk  I entered all my details NI number dob etc got an ID number to sign in when I try to sign in with the details .. it’s asking for me to confirm my identity any TWO of the following they can ask questions about

1) current passport (don’t have a current one) 

2) credit reference questions such as date of first credit card or phone contract ( I’m 71 can’t remember that far back)

3) Northern Ireland Driving Licence (I have a driving license but I live in England, why ask for a Northern Ireland one? it’s stupid)

This is from the Pension Service dated 12/03/22 don’t know if this is any help :-
how your benefit is made up
basic state pension.                                                   £141.85
pre 97 additional state pension     £48.68
less contracted-out deduction of  £56.08
                                                          Total payable    £0.00 
Post 97 addition state pension.                                 £24.04
Graduated Retirement Benefit.                                  £1.49  

                                        The amount each week is. £167.38

Also

works pension slip payment date 01/04/2022 Tax Code 413L
works pension slip payment date 29/04/2022 Tax Code 387L 
so I’m actually getting less than I did before

This is all so confusing, do you think that my tax code is correct? & I should accept that they know what they are doing.

with grateful thanks for helping me.

Hilary

JGB1955

Your state pension has increased by £2.51 per week w.e.f. 11 April, so you are receiving about £130 more per annum.  That £130 reduces the tax-free element of your occupational pension.  £8700 of your £12,570 allowance is taken up by your SP, leaving the £3870  (Code 387L) set against your other pension.