Pension and tax codes confusion

grumbler

Can anyone shed any light on this before we call HMRC?

It's about my elderly friend. He has both a small state pension and a bigger private one. A recent letter from the private provider stated:

"On 6th April 2022 , HMRC issued instructions to us to change your tax code to 33L. As a result of this code, more tax has been deducted. We are not provided with any explanation ... contact HMRC direct."

He was able to find some earlier payslips, and the code was 1083L in Apr 2021, 785LM1 in Jul 2021.

If this makes any difference, his birthday is in April, he reached 80 this year and his state pension was increased.

Albermarle

When you say a small state pension, do you know the actual amount? Otherwise will be a bit difficult to work out what is happening.

Dazed_and_C0nfused

Have they been paid some State Pension arrears by DWP (issue in the news over recent months)?

They really need the breakdown of how the 33L code has been calculated to understand what's happening.

grumbler

Albermarle said:

When you say a small state pension, do you know the actual amount? Otherwise will be a bit difficult to work out what is happening.

He says it's currently a little more than £400 p.m. This seems to be more than £85 p.w., but he says he's getting extra for his wife that doesn't have her own pension.

molerat

State pension is never paid monthly, it is either weekly or 4 weekly.  The most likely wrong tax code would be the 1083,  Without the exact weekly figure it is impossible to say.  785 is probably nearer the mark with a low pension, using his wife's 10% marriage allowance would cover a SP of around £115 pw, without £91 pw.  The tax code letter he received will explain how it was calculated.

squirrelpie

Back in January I got a letter from HMRC that started "This is to tell you your tax codes for 6 April 2022 to 5 April 2023". It lists my personal allowance and how it is split between my state pension and private pensions. So I understand why the private providers use the codes they do.

I suppose everybody gets such a letter every year. If so, then looking at his would be the best way to start to understand what is going on.

Albermarle

squirrelpie said:

Back in January I got a letter from HMRC that started "This is to tell you your tax codes for 6 April 2022 to 5 April 2023". It lists my personal allowance and how it is split between my state pension and private pensions. So I understand why the private providers use the codes they do.

I suppose everybody gets such a letter every year. If so, then looking at his would be the best way to start to understand what is going on.

Good point but if the code has just changed, the new coding may not yet have been sent. 

xylophone

He says it's currently a little more than £400 p.m. This seems to be more than £85 p.w., but he says he's getting extra for his wife that doesn't have her own pension.

This looks a bit odd.

There used to be an "adult dependency increase" paid with state pension in certain cases but this ended in 2020.

Does he mean that his wife is receiving a state pension based on his contributions? This would  not be taxable on him. 

With regard to the £400 a month (or even every four weeks), this seems very low.

Even just a basic state pension would be over £7000 a year.

Are you able to establish his exact position with regard to state pension?

His benefit increase letter (received around mid March) should clarify.

What is his exact position with regard to his  private/occupational pension?

Does he have other income from savings/investments?

squirrelpie

Albermarle said:

squirrelpie said:

Back in January I got a letter from HMRC that started "This is to tell you your tax codes for 6 April 2022 to 5 April 2023". It lists my personal allowance and how it is split between my state pension and private pensions. So I understand why the private providers use the codes they do.

I suppose everybody gets such a letter every year. If so, then looking at his would be the best way to start to understand what is going on.

Good point but if the code has just changed, the new coding may not yet have been sent. 

Indeed but I expect that HMRC has sent or will send a change of coding notice if such a thing happens. Either way, the gentleman should have a piece of paper with the answer written on it, either now or very shortly. If not then asking HMRC why he hasn't would be a good question to ask.

grumbler

OK, thank you all.

I'll try to get more information next time I see him. ATM I can add that he is in UK since mid 90s and retired, I guess, about 10 years ago - this can possibly explain his low state pension.

He never was good with papers, but this became even worse with the age. No folders/files, just piles of letters of all sorts. His wife is younger a little, but absolutely helpless in this respect. I do have plans to intervene and bring some order into this.